Monthly Recurring Revenue Per-Unit Formula
Learn how to calculate gross MRR, discount-adjusted net MRR, net revenue per unit, and annual recurring revenue run rate.
This formula estimates monthly recurring revenue from active billable units and their standard monthly price, then reduces it for recurring discounts and credits. It helps separate headline recurring billings from the net recurring amount used for operational reporting.
- 100% Free
- No Sign-Up Required
- Private & Secure
- Mobile Friendly
Net Monthly Recurring Revenue
Where:
Multiply active units by the monthly price to find gross MRR. Calculate the recurring discount from gross MRR, subtract that discount and any recurring credits, and do not let the estimated result fall below zero.
Variables Explained
| Variable | What It Means | Unit |
|---|---|---|
| activeUnits - Active billable units | Number of units currently billed on a recurring monthly basis. | number |
| monthlyPricePerUnit - Monthly price per unit | Standard recurring monthly charge for one billable unit before discounts. | currency |
| discountRate - Average discount rate | Average ongoing recurring discount expressed as a percentage of gross MRR. | percent |
| monthlyRecurringCredits - Monthly recurring credits | Recurring service credits, refunds, or concessions that reduce monthly revenue. | currency |
Step-by-Step Calculation
Calculate gross monthly recurring revenue
Gross MRR is the monthly recurring charge before any discounts or recurring credits.
grossMonthlyRecurringRevenue = activeUnits * monthlyPricePerUnit
Convert the discount rate to a decimal
A percentage must be divided by 100 before it is applied to revenue.
discountDecimal = discountRate / 100
Calculate the monthly discount amount
This estimates the ongoing reduction from average recurring discounts.
monthlyDiscountAmount = grossMonthlyRecurringRevenue * discountDecimal
Calculate net monthly recurring revenue
Net MRR is gross MRR after recurring discounts and credits. The max function prevents a negative estimate.
netMonthlyRecurringRevenue = max(0, grossMonthlyRecurringRevenue - monthlyDiscountAmount - monthlyRecurringCredits)
Calculate net recurring revenue per unit
Divide net MRR by active units to find the average net monthly amount per active unit.
netRevenuePerUnit = netMonthlyRecurringRevenue / activeUnits
Annualize the current run rate
This expresses the current month's net MRR as a 12-month run rate, not a forecast or recognized revenue total.
annualRecurringRevenueRunRate = netMonthlyRecurringRevenue * 12
Example: 100 active units at $50 per month
Gross MRR
100 × $50.00
$5,000.00
Monthly discount
$5,000.00 × (10 ÷ 100)
$500.00
Net MRR
max(0, $5,000.00 − $500.00 − $100.00)
$4,400.00
Net revenue per unit
$4,400.00 ÷ 100
$44.00 per unit
Annual recurring revenue run rate
$4,400.00 × 12
$52,800.00 per year
Final Result
Estimated net MRR is $4,400.00, equal to $44.00 per active unit and a $52,800.00 annual recurring revenue run rate.
Assumptions
- ✓Each active billable unit is billed for a full month at the stated standard monthly price.
- ✓The discount rate represents an average ongoing discount across the active units.
- ✓Monthly credits are recurring reductions rather than one-time adjustments.
- ✓The annual result is a run-rate calculation using the current month’s net MRR.
Limitations
- !The result measures estimated recurring billed revenue and may not match revenue recognized under applicable accounting policies.
- !Proration, billing timing, collections, taxes, variable usage charges, and contract-specific terms are not included.
- !A single average discount rate can hide meaningful differences between customer, product, or unit groups.
- !Annualized run rate does not predict unit growth, churn, price changes, or future credits.
Common Mistakes to Avoid
Including free, inactive, trial, or one-time units in active billable units.
Entering an annual price as though it were a monthly price per unit.
Adding a 10% discount as 10 rather than calculating it as 10 ÷ 100.
Including one-time implementation fees or one-time refunds in recurring credits.
Treating the annualized run rate as recognized annual revenue or a forecast.
Related Formulas
Frequently Asked Questions
What is the formula for per-unit monthly recurring revenue?
Start with active units multiplied by monthly price per unit. Subtract the recurring discount amount and recurring monthly credits to estimate net MRR.
How is gross MRR calculated?
Gross MRR equals active billable units multiplied by the standard monthly price per unit, before discounts and credits.
How do I calculate net MRR per unit?
Divide net monthly recurring revenue by the number of active billable units.
How do recurring credits affect MRR?
Recurring credits are subtracted after the discount amount because they reduce the monthly recurring revenue estimate directly.
How is ARR calculated from net MRR?
The annual recurring revenue run rate equals net MRR multiplied by 12. It annualizes the current monthly level.
Ready to calculate your result?
Use the calculator to get instant results with your own inputs.