Monthly Recurring Revenue Definition for SaaS

What is monthly recurring revenue in a SaaS business?

For C-level execs and for organizations that adopt Monthly Recurring Revenue as a core operating and board-level metric, Monthly Recurring Revenue is probably the most important SaaS metric of all. 

The general concept is that Monthly Recurring Revenue is a measure of the predictable and recurring revenue components of your subscription business. It will typically exclude one-time and variable fees, but for month-to-month businesses could include such items.

What is important about Monthly Recurring Revenue is not a single number per se, but rather the momentum around the components of your company's MRR:

  • Monthly Recurring Revenue from renewals
  • Monthly Recurring Revenue from new sales
  • Monthly Recurring Revenue from upgrades
  • Monthly Recurring Revenue losses, or revenue churn

As is for most , there is no specific definition for Monthly Recurring Revenue. In fact, there can be significant confusion over the term itself and measurement of Monthly Recurring Revenue because it feels and sounds like "revenue" in the context of revenue recognition. However, MRR is not recognized revenue and is calculated very differently, which can cause confusion and turmoil in the finance department, the group typically tasked with calculating and reporting Monthly Recurring Revenue.

It will be up to your organization to define what Monthly Recurring Revenue is and most importantly the rules for calculating the components.

Related terms:

CMRR How to Calculate MRR Committed MRR
MRR Cohort Bessemer MRR Growth Contracted MRR

From Our Blog

SaaSOptics, the only subscription management platform specifically designed for emerging a...

I often talk about B2B SaaS metrics from the perspective of what investors want. If you do...

 Another year at SaaStr Annual is over, but that's not the end. SaaStr is packed with spea...


Ready to start modernizing your financial operations?

See it Live