What is the difference?

MRR vs Revenue

Monthly Recurring Revenue

Revenue

What is it?

Monthly Recurring Revenue (MRR) is the sum of all subscription revenue expressed as a monthly value. For most companies, MRR is the sum of all new business subscriptions and upgrades (sometimes called expansion), minus downgrades (or contractions) and cancelled subscriptions. Though not a Generally Accepted Accounting Principle (GAAP) value, it's the Revenue equivalent used by every SaaS company. MRR is used interchangeably with ARR.

Revenue is defined as the income generated through a business’ primary operations. It is often referred to as “top line” and is shown at the top of an income statement.

Formula

ƒ Sum(Recurring Revenue irrespective of billing interval expressed as a monthly value)
ƒ Sum(Revenue)

Example

If 10 customers are paying $150 per month, then MRR would be; MRR = $1500 If 7 customers are paying $200 per month, and 3 customers are paying $100 per month, then MRR would be; MRR = $1700

If a customer signs an annual contract for $12,000 consisting of monthly payments, then the revenue for each month of that year is $1,000, and the revenue for that year is $12,000.

Published and updated dates

Date created: Mar 28, 2018

Latest update: Sep 27, 2019

Date created: Feb 10, 2019

Latest update: Oct 19, 2021