MRR (monthly recurring revenue)
Updated 2026-11-02
Definition
MRR, or monthly recurring revenue, is the amount of predictable subscription revenue a business earns each month. It's the core metric for most subscription software companies, since it shows the size of the business and how fast it's growing.
To calculate it, convert every active subscription to a monthly amount and add them up. An annual plan at $1,200 counts as $100 of MRR. One-time fees, such as setup or consulting, don't count.
Example
This example uses made-up numbers. You have:
- 100 accounts on a $50 monthly plan: $5,000
- 20 accounts on a $200 monthly plan: $4,000
- 10 accounts on a $2,400 annual plan: $2,000
Your MRR is $11,000.
In the next month, you add $1,500 from new accounts and $500 from upgrades, then lose $800 to cancellations and $200 to downgrades. Net new MRR is $1,000, so MRR ends at $12,000.
Common mistakes
- Counting a full annual payment as one month's revenue
- Including one-time fees
- Including accounts that have canceled but haven't reached the end of the term
- Treating cash collected as MRR, since a discount or a failed charge can make them differ
How Headstream handles it
Headstream doesn't report MRR. It records charges, refunds and disputes from Stripe in a ledger and reports revenue as money collected. An annual payment shows up as one payment on the day it was charged, with no monthly spreading. Connecting Stripe is in beta.
That makes Headstream useful for a different question: which channels brought in the money? Renewal payments are linked back to the person, so a channel's revenue grows as those buyers keep paying. See revenue attribution. For MRR itself, use Stripe's own billing reports.