MRR — Monthly Recurring Revenue

The predictable monthly revenue from active subscriptions, normalized to a monthly figure regardless of billing frequency.

What it actually means

Monthly Recurring Revenue is the foundational SaaS metric. Calculated as the sum of all active subscription rates normalized to monthly. Annual subscriptions divided by 12. Quarterly divided by 3. One-time setup fees explicitly EXCLUDED — MRR is the recurring portion only. MRR breaks down into: New MRR (this month's new customers), Expansion MRR (existing customers upgrading), Churn MRR (customers canceling), Contraction MRR (existing customers downgrading). Net New MRR = New + Expansion - Churn - Contraction.

Distinguishing it from look-alikes

MRR ≠ revenue. Revenue includes one-time setup fees, professional services, etc. MRR is specifically the recurring subscription rate. Cadence Founding Coach at $39/mo + $199 setup contributes $39 to MRR (the setup is one-time revenue but not MRR). At 25 founding coaches, Cadence MRR = $975/mo from founding tier alone.

Examples

25 Cadence Founding @ $39/mo

MRR = $975/mo (setup fees of $4,975 collected separately, not in MRR)

1 Cadence Studio annual @ $179/mo billed yearly

Annual contract $2,148/yr ÷ 12 = $179/mo MRR

Customer downgrade $179 → $79

Contraction MRR of -$100 in the month of downgrade