Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR) sound trivial — add up subscriptions — but the details are where founders report numbers they later have to walk back. Here is the correct way, with the edge cases that trip people up.
MRR = the sum of the monthly-normalized recurring amount of every active subscription. ARR = MRR × 12. ARR is just an annualized view of the same recurring base; it is not the sum of annual contract values signed this year.
This is the step people skip. An annual plan of $1,200 is $100 of MRR, not $1,200. If you count the full $1,200 in the month it bills, your MRR spikes and crashes and none of your retention math works. Always divide annual by 12, quarterly by 3, two-year by 24.
Total MRR = $2,896. ARR = $2,896 × 12 = $34,752.
Total MRR tells you how big you are; the movement tells you whether you're healthy. Each month decompose the change:
Ending MRR = Starting MRR + New + Expansion − Contraction − Churn + Reactivation.
Two companies can both grow MRR 10% in a month — one on new logos, one on churn masked by a couple of big expansions. The movement view is the only way to see the difference, and it's what investors ask for.
A dashboard template that normalizes plans automatically and builds the movement bridge for you removes every one of these errors — paste your export and the MRR/ARR and the breakdown are computed for you.
Sum the monthly-normalized recurring amount of every active subscription. Divide annual plans by 12, apply real discounts, and exclude one-time fees and non-recurring services.
ARR is simply MRR × 12 — an annualized view of your recurring base. It is not the total value of annual contracts signed in a year.
No. One-time setup fees, one-off services, and uncommitted usage overages are real revenue but not recurring, so they don't belong in MRR or ARR.
Page built 2026-06-14 from public, dated buying-intent signals. Updated as new signals land.