How to calculate MRR (with formulas and edge cases)

Summary

MRR is your monthly subscription revenue counted the same way each month. Add up active subscriptions, divide annual plans by 12, and skip one-time charges.

MRR (monthly recurring revenue) is the money you expect from subscriptions each month. If you use Stripe, you add up active subscriptions. That number is what investors and your weekly review usually start with.

The basic formula

Add each customer's monthly subscription amount:

MRR = sum of monthly subscription amount for each active customer

Ten customers on $49/month plans means $490 MRR. Easy when everyone pays monthly.

Annual and quarterly plans

Divide annual price by 12. A $1,200/year plan counts as $100/month MRR, not $1,200. 

Annual plan MRR = annual price ÷ 12
Quarterly plan MRR = quarterly price ÷ 3

If you forget this step, your MRR looks much higher than it really is.

What to leave out

  • One-time setup fees and services
  • Refunds in the month they happened
  • Free trials until they convert to paid
  • Paused subscriptions (count as churn or track separately)

How MRR moves each week

Track four types of change:

  • New — first-time paying customers
  • Expansion — upgrades (more seats, higher tier)
  • Contraction — downgrades without canceling
  • Churn — customers who canceled
Net new MRR = New + Expansion − Contraction − Churn
Ending MRR = Starting MRR + Net new MRR

Stripe edge cases

  • Coupons: use the amount the customer actually pays each month.
  • Multiple subs per customer: add them all before totaling MRR.
  • Mid-month upgrade: use the new monthly rate going forward, not the prorated invoice.
  • Multiple currencies: pick one reporting currency and stick with it.

MRR vs cash

  • MRR — monthly run rate if nothing changes
  • Cash — what hit your bank this month
  • Recognized revenue — what you earned (annual deals spread over 12 months)

A $12K annual deal is $12K cash today but $1K MRR. Mixing these up leads to bad hiring and runway calls.

Weekly checklist

  1. List active Stripe subscriptions.
  2. Divide annual and quarterly plans to monthly amounts.
  3. Drop one-time charges and trials.
  4. Compare to last week: new, expansion, contraction, churn.

Below ~20 customers, a spreadsheet works. Past that, edge cases pile up and weekly math takes longer. See how to track MRR from Stripe for a simple routine.