Monthly Recurring Revenue (MRR)
The predictable, recurring revenue a company earns each month from active subscriptions or contracts.
The MRR waterfall breaks down revenue movements so you see what drives growth or contraction.
What is Monthly Recurring Revenue (MRR)?
MRR is the heartbeat metric for any subscription or SaaS business. It represents the total revenue you can expect every month from your current customers, normalized to a monthly figure.
Annual contracts are divided by 12 to compute their MRR contribution. If a customer pays $12,000/year, they contribute $1,000 to your MRR.
MRR is different from total revenue because it only includes recurring, predictable income — not one-time payments, services revenue, or implementation fees.
Why it matters
MRR is the foundation of your revenue story. Investors use it to evaluate growth rate, predict future revenue, and assess the health of your business. A company growing MRR 15% month-over-month tells a very different story than one growing 3%.
For runway calculation, MRR is the revenue offset against your burn. Higher MRR means lower net burn, which means longer runway.
Formula
MRR = Sum of all monthly subscription revenue from active customers
Example
You have 20 customers paying $500/month and 5 customers on annual plans at $9,600/year ($800/month equivalent). MRR = (20 × $500) + (5 × $800) = $10,000 + $4,000 = $14,000.
How RunwayCal helps
RunwayCal tracks committed MRR from your deal pipeline and includes it in runway computation. The revenue model in the Planner lets you project MRR growth with assumptions you define, and the MRR waterfall shows new, expansion, contraction, and churned revenue.
Common mistakes
- 1Including one-time revenue (setup fees, consulting) in MRR
- 2Not normalizing annual contracts to monthly equivalents
- 3Counting committed but unsigned deals in MRR
Track your MRR and see how it impacts runway
RunwayCal connects your revenue pipeline to your runway calculation, so you see exactly how each deal extends your timeline.
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