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MonthlyRecurring Revenue (MRR) refers to revenue that an organization expects to receive from its customer(s) for its products or services every month.
Since MRR is calculated for a month, any payment other than a month’s duration needs to be normalized for it.
MRR provides a way to easily understand the pulse of your subscription business and forecast cash flow in the short term.
MRR = Sum of monthly recurring charges of all paying customers
If you have a mix of one-time & recurring charges for a customer, include all recurring plans, add-ons (and account for discounts), and exclude setup fee, non-recurring add-ons, any payment adjustment, ad hoc charges, etc.
MRR vs ARR: If your customers can cancel at any time or if they pay month-to-month, use MRR. If you have term agreements with most customers in multiples of one year, use ARR.
