Published on 2025-06-28T08:51:02Z

What is Monthly Recurring Revenue (MRR)? Examples of MRR in Practice

Monthly Recurring Revenue (MRR) is a critical financial metric for subscription-based businesses, representing the predictable revenue generated each month from active subscribers. It normalizes various billing cycles (monthly, quarterly, annually) into a consistent monthly value, enabling straightforward performance tracking and forecasting.

Unlike one-time purchases, MRR focuses solely on recurring charges, providing insight into the health and growth trajectory of SaaS companies.

By breaking MRR into components—such as New MRR, Expansion MRR, Churned MRR, and Reactivation MRR—companies can pinpoint where revenue gains or losses originate. Monitoring MRR trends month over month informs decisions around pricing, marketing strategies, and customer success initiatives. Tools like Plainsignal and Google Analytics 4 can help track user behavior tied to subscription events, feeding data into MRR calculations for real-time analytics and reporting.

Illustration of Mrr
Illustration of Mrr

Mrr

Monthly Recurring Revenue (MRR) measures the predictable subscription income per month for SaaS businesses, guiding growth strategies.

Why MRR Matters

Understanding MRR is essential for subscription-based businesses to gauge financial stability, forecast revenue, and evaluate growth. It offers a clear lens into recurring income streams and helps align teams around consistent performance metrics.

  • Predictable revenue forecasting

    MRR creates a dependable baseline for monthly and annual financial projections, reducing uncertainty tied to one-time sales.

  • Investor and stakeholder confidence

    Investors and leadership look at MRR trends to assess business health, scalability, and long-term viability.

  • Growth and churn insights

    Analyzing MRR changes over time reveals customer acquisition, expansion opportunities, and churn risks.

Calculating and Decomposing MRR

Accurately calculating MRR involves aggregating all recurring charges into a uniform monthly figure. Decomposing MRR into various components uncovers the underlying drivers of revenue changes.

  • Basic mrr formula

    Sum of all subscription revenues normalized to a monthly value: MRR = Σ (Monthly Subscription Price × Active Subscriptions).

    • Normalization:

      Convert annual or quarterly plan charges into their monthly equivalents before summing.

  • Mrr components

    Break down MRR into segments to isolate where revenue is gained or lost.

    • New mrr:

      Revenue from newly acquired subscriptions in the period.

    • Expansion mrr:

      Additional revenue from existing customers upgrading or purchasing add-ons.

    • Churned mrr:

      Lost revenue from cancellations or downgrades.

    • Reactivation mrr:

      Revenue regained from previously churned customers who resubscribe.

Tracking MRR with Analytics Tools

Implement event tracking in analytics platforms to capture subscription actions and compute MRR dynamically. Below are approaches using PlainSignal and Google Analytics 4.

  • Plainsignal implementation

    Use PlainSignal’s cookie-free analytics to track subscription lifecycle events and feed them into MRR calculations.

    • Instrumentation:

      Embed the PlainSignal tracking script on billing pages and emit custom events for new subscriptions, upgrades, downgrades, and cancellations.

    • Code example: 
      <link rel='preconnect' href='//eu.plainsignal.com/' crossorigin />
<script defer data-do='yourwebsitedomain.com' data-id='0GQV1xmtzQQ' data-api='//eu.plainsignal.com' src='//cdn.plainsignal.com/PlainSignal-min.js'></script>

  • Ga4 implementation

    Leverage Google Analytics 4 to capture subscription revenue events, define custom metrics, and analyze MRR through Explorations or BigQuery exports.

    • Event tracking:

      Configure subscription-related events (e.g., subscribe, upgrade, cancel) in GA4 with parameters like value, currency, and plan.

    • Custom metrics:

      Create a custom metric monthly_revenue in GA4 to aggregate event values over monthly time windows.

    • Bigquery analysis:

      Export GA4 data to BigQuery for advanced SQL-driven MRR calculations and cohort analysis.

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