SaaS & Retention
MRR Calculator
MRR is the heartbeat of a subscription business, but the total alone tells you almost nothing. The movement underneath it, new against expansion against churn, is where the story is. This shows both.
Result
FormulaMRR = paying customers × ARPU. Net new MRR = new MRR + expansion MRR − churned MRR
Worked example
420 customers at $79 each is $33,180 of MRR, or a $398,160 annual run rate. This month brought $4,200 of new and $1,600 of expansion against $2,100 churned, so net new MRR is $3,700 and the growth rate is 11.15 percent. Note that churn consumed half of the new business won, which is the number I would take into the next planning meeting.
What to watch for
Normalise everything to a monthly figure before it enters MRR. Annual prepayments should be divided across twelve months, not booked in the month the cash landed, or your MRR chart becomes a cash flow chart with a misleading label.
Keep one-off setup fees, professional services and usage overages out of MRR. They are real revenue and they are not recurring, and blending them in makes the number useless for forecasting.
Expansion MRR is the cheapest growth available to most software businesses, because the customer is already paying and already trusts you. A month where expansion exceeds churn is worth more than a month with a splashy new logo.
Frequently asked questions
What counts as expansion MRR?
Additional recurring revenue from existing customers: upgrades to a higher tier, extra seats, and add-on modules billed monthly. It excludes one-time charges and it excludes anything you would not expect to bill again next month.
How should annual contracts be handled?
Divide the contract value by twelve and count that as monthly MRR for the duration of the term. Reporting the whole annual amount in the signing month produces a spike that misrepresents both growth and churn for the following year.
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This calculator runs entirely in your browser. Nothing you enter is sent to a server, logged, or stored. Figures are for planning and do not constitute financial advice. See disclosures.