The MRR Calculator estimates monthly recurring revenue from your subscription price, new paying customers per month, monthly cancellations, and projection period. It also calculates the projected number of active customers.
This is a simplified growth forecast starting from zero customers—not a calculator that simply multiplies an existing subscriber count by a monthly price.
How to use the MRR Calculator
- Subscription price: Enter the monthly recurring price per customer. For multiple plans, use a customer-weighted average after recurring discounts. Convert annual subscriptions to a monthly amount first.
- New customers: Enter the number of new paying customers you expect to add each month, not your total customer base. Exclude free users and unpaid trials.
- Churn: Enter the number of customers who cancel each month, not a percentage. For example, enter 10 for ten cancellations—not for a 10% churn rate.
- Period: Enter the projection length in whole months, starting at one month.
The results represent your projected active customers and their monthly recurring revenue at the end of that period. They do not represent total revenue collected throughout the period.
If you have a churn percentage rather than a cancellation count, the churn rate calculator can help you understand the relationship. However, a fixed churn percentage produces changing cancellation counts as your customer base changes; this MRR model holds the cancellation count constant.
Monthly recurring revenue formula
For a current subscription base, the basic definition is:
MRR = Active paying customers × Average monthly recurring revenue per customer
The calculator first projects the customer count using these formulas:
Active customers = n × m − t × (m − 1)
MRR = p × n × m − p × t × (m − 1)
| Variable | Meaning | Unit |
|---|---|---|
| p | Average monthly subscription price | Currency per customer per month |
| n | New paying customers added each month | Customers per month |
| t | Customers canceling each month | Customers per month |
| m | Projection period | Months |
Important timing assumption: The formula applies no cancellations in month one. It subtracts the same cancellation count in each subsequent month, which is why churn is multiplied by m − 1. It assumes constant acquisition, cancellations, and average price, with no starting customer balance.
Worked example: a six-month SaaS forecast
Suppose your monthly subscription costs $50, you add 40 paying customers per month, and 10 customers cancel per month. For a six-month projection:
- Total customers acquired: 40 × 6 = 240.
- Cancellations counted by the model: 10 × (6 − 1) = 50.
- Active customers after six months: 240 − 50 = 190.
- MRR after six months: 190 × $50 = $9,500 per month.
The $9,500 is the recurring monthly revenue level reached in month six. It is not six months of cumulative revenue.
What should you include in MRR?
MRR measures the monthly-normalized value of recurring subscriptions. Keep the price input consistent with that definition:
- Annual billing: A $1,200 annual subscription contributes $100 to MRR, even if the customer pays the full amount upfront.
- Multiple tiers: Use a weighted average, not a simple average of listed prices. With 80 customers paying $20 and 20 paying $50, MRR is $2,600 and the average monthly price is $26.
- Recurring discounts: Use the amount customers actually pay for the period being modeled.
- Nonrecurring charges: Exclude setup fees, one-time services, and other nonrecurring sales.
A single average price is less reliable when new customers choose very different plans from existing customers or when cancellations are concentrated in a particular tier. In those cases, calculate each segment separately and add the MRR totals.
How to interpret your MRR result
Use the result to compare assumptions, not as a guaranteed forecast. In the six-month example:
- Improved retention: Reducing cancellations from 10 to 5 per month produces 215 active customers and $10,750 MRR, with all other inputs unchanged.
- Higher pricing: Raising the monthly price from $50 to $60 produces $11,400 MRR if acquisition and cancellations remain unchanged. That condition matters: pricing changes can affect both.
Compare conservative, expected, and optimistic scenarios, then update your assumptions using actual customer data. Watch for these limitations:
- MRR is not profit. Hosting, support, payroll, marketing, and other costs are not deducted. Higher MRR does not automatically mean higher profitability.
- MRR is not cash flow or accounting revenue. Payment timing, annual prepayments, refunds, and revenue-recognition rules require separate tracking.
- The forecast is linear. It does not automatically model percentage-based churn, seasonal acquisition, upgrades, downgrades, or changing prices.
- Negative customers are not a meaningful forecast. If the formula produces a negative customer count or MRR, the cancellation assumptions are infeasible over that period and need revision.
Testing pricing for an existing subscriber base
An established business needs to include its opening subscriber count, which this calculator's formula does not do. For a separate one-month scenario, use:
Ending customers = Opening customers + New customers − Cancellations
For example, a streaming service starts with 50,000 subscribers paying $10 per month. Consider two hypothetical alternatives:
- Higher price: Charge $12, acquire 5,000 customers, and lose 2,500. Ending customers: 52,500.
- Lower price: Charge $5.99, acquire 12,000 customers, and lose 500. Ending customers: 61,500.
| Scenario | Monthly price | Active customers | MRR |
|---|---|---|---|
| Starting position | $10.00 | 50,000 | $500,000 |
| Higher-price scenario | $12.00 | 52,500 | $630,000 |
| Lower-price scenario | $5.99 | 61,500 | $368,385 |
Use the verified table values when interpreting the illustration: the lower-price calculation is 61,500 × $5.99 = $368,385. The larger subscriber base does not offset the lower price in this example. Neither scenario proves which strategy is best; the outcome depends on actual acquisition, retention, customer value, and costs.
Track actual MRR alongside your forecast
To understand why actual MRR changed, separate new subscriptions from changes within your existing base:
Ending MRR = Starting MRR + New MRR + Expansion MRR + Reactivation MRR − Contraction MRR − Churned MRR
Expansion comes from upgrades or additional recurring purchases; contraction comes from downgrades or reduced recurring spend. Reactivation comes from previously canceled customers returning. These components are useful for diagnosing performance but are not separate inputs in this calculator. See these practical breakdowns of MRR tracking and Paddle's guide to SaaS finance metrics for additional context.
MRR vs. ARR: For a consistent recurring subscription base, annual recurring revenue is commonly calculated as ARR = MRR × 12. Thus, $9,500 MRR corresponds to $114,000 ARR. This annualizes the current revenue level; it does not predict the next 12 months of revenue or smooth out seasonality.
Useful metrics to review with MRR
- Customer Lifetime Value Calculator: Estimate customer value over the relationship rather than looking only at one month's recurring revenue.
- Break-even point calculation and margin of safety: Assess revenue requirements and the cushion above break-even using appropriate cost assumptions.
- ROAS Calculator: Review advertising-attributed revenue relative to ad spend. Do not treat projected MRR alone as an advertising return.
- Calculating ROI and ROE: Evaluate investment returns and returns on shareholder equity, which require information beyond subscription revenue.
You can find more tools for small business owners in the Calcopolis business calculator collection.
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