Accounting Monthly Recurring Revenue Calculator
Calculate monthly recurring revenue, MRR growth, annual recurring revenue and retention from subscription revenue changes.
Overview
This Accounting Monthly Recurring Revenue Calculator estimates ending MRR from your opening recurring revenue, new customers, expansion, contraction and churn. It also shows the monthly growth rate, annualized recurring revenue and net revenue retention for existing customers.
How it works
The calculator starts with beginning MRR and adds new MRR and expansion MRR. It then subtracts contraction MRR and churned MRR to calculate ending MRR. New MRR equals the number of new customers multiplied by their average monthly recurring revenue. The growth rate compares ending MRR with starting MRR, while net revenue retention measures changes in the starting customer base without counting revenue from new customers. ARR is an annualized snapshot calculated by multiplying ending MRR by 12.
How to use this calculator
- 1Enter your recurring monthly revenue at the start of the month.
- 2Add the number of new customers and their average monthly recurring revenue.
- 3Enter MRR gained from existing customer upgrades or add-ons.
- 4Enter MRR lost through downgrades and customer cancellations.
- 5Review ending MRR, growth, ARR and net revenue retention.
Example Calculation
Starting MRR
$10,000
New Customers
8
Average New Customer MRR
$150
Expansion MRR
$500
Contraction MRR
$200
Churned MRR
$700
Ending MRR
$10,800
Starting with $10,000 in MRR, adding $1,200 from new customers and $500 from expansion, then losing $900 to contraction and churn, produces ending MRR of $10,800. That is 8.0% monthly growth, $129,600 annualized recurring revenue and 96.0% net revenue retention.
Frequently asked questions
What is monthly recurring revenue (MRR)?
MRR is the predictable revenue expected each month from active recurring subscriptions or contracts. It commonly excludes one-time fees and non-recurring project income.
How is MRR calculated?
This calculator adds new customer and expansion MRR to starting MRR, then subtracts contraction and churned MRR to estimate ending MRR.
What is the difference between churned MRR and contraction MRR?
Churned MRR is lost when a customer fully cancels. Contraction MRR is lost when an existing customer remains but spends less, such as after a downgrade.
What is expansion MRR?
Expansion MRR is added recurring revenue from current customers, including upgrades, extra seats, add-ons or higher subscription tiers.
Does ARR equal guaranteed yearly revenue?
No. ARR is an annualized run-rate based on current ending MRR multiplied by 12. Actual annual revenue can change as customers join, expand, downgrade or cancel.
What does net revenue retention show?
Net revenue retention shows how the starting customer revenue base changed after expansion, contraction and churn, without including new customer revenue. A result above 100% means expansion more than offset losses within that base.
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Assumptions and warnings
Assumptions
- MRR includes predictable subscription or contracted recurring revenue for a single month.
- One-time setup fees, usage charges, taxes, refunds and non-recurring services are excluded unless included in the values entered.
- New customer MRR is estimated using one average monthly amount for all new customers.
- Annual recurring revenue is calculated as ending MRR multiplied by 12 and does not forecast future churn or expansion.
- Results are management estimates and depend on consistent revenue recognition and customer classification.
Warnings
- This calculator provides a revenue tracking estimate only and is not accounting, tax or financial advice.
- Use your organization’s accounting policies and revenue recognition rules when preparing financial statements.