# MRR Calculator

> Calculate your Monthly Recurring Revenue (MRR), track growth trends, and forecast future revenue based on your subscription metrics.

- **URL**: https://dodopayments.com/tools/mrr-calculator

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## What is Monthly Recurring Revenue (MRR)?

**Monthly Recurring Revenue (MRR)** is the predictable, normalized monthly revenue earned from all active subscriptions. It is the single most important financial metric for any SaaS or subscription business, providing a clear snapshot of revenue health and growth trajectory.

MRR strips away the noise of one-time payments, annual billing cycles, and variable usage charges to give you a standardized monthly figure you can use for forecasting, investor reporting, and strategic planning.

## Why Calculate MRR?

Tracking MRR allows you to:

- **Measure growth**: Understand whether your business is growing month-over-month by comparing New MRR, Expansion MRR, and Churned MRR.
- **Forecast revenue**: Project future revenue based on historical growth rates and current pipeline.
- **Identify churn problems early**: A declining MRR signals customer loss before it becomes critical.
- **Benchmark against peers**: Investors and analysts use MRR multiples (ARR multiples) to value SaaS companies.

## How MRR is Calculated

The basic MRR formula is:

**MRR = Number of Active Subscribers x Average Revenue Per User (ARPU)**

For more nuanced analysis, break MRR into components:

- **New MRR**: Revenue from newly acquired customers this month.
- **Expansion MRR**: Additional revenue from existing customers (upgrades, add-ons, seat expansion).
- **Contraction MRR**: Revenue lost from downgrades within existing customers.
- **Churned MRR**: Revenue lost from customers who cancelled entirely.

**Net New MRR = New MRR + Expansion MRR - Contraction MRR - Churned MRR**

## Input Metrics

- **Total Active Subscribers**: The number of paying customers currently on an active subscription plan.
- **Average Revenue Per User (ARPU)**: The average monthly payment across all subscribers. If you have tiered pricing, this accounts for the blended average.
- **New Customers This Month**: How many new paying customers you acquired during the current period.
- **Churned Customers This Month**: How many customers cancelled or did not renew their subscription.
- **Expansion Revenue**: Additional revenue gained from existing customers through upgrades, add-ons, or increased usage.

## Output Metrics

- **Current MRR**: Your total monthly recurring revenue based on current subscriber count and ARPU.
- **Net New MRR**: The net change in MRR after accounting for new, expansion, contraction, and churned revenue.
- **MRR Growth Rate**: The month-over-month percentage change in MRR, indicating acceleration or deceleration.
- **Annualized Run Rate (ARR)**: MRR x 12 -- a useful approximation for annual revenue used in fundraising and valuation discussions.
- **Months to Target**: Based on current growth rate, how many months until you reach a specified MRR target.