MRR vs Revenue

Monthly Recurring Revenue (MRR) and Revenue measure business income in fundamentally different ways, each serving distinct analytical purposes. MRR specifically tracks predictable, subscription-based income that a company expects to receive every month, excluding one-time payments, variable fees, or non-recurring charges. Revenue, in contrast, represents the total income generated from all sources during a given period, including both recurring and non-recurring elements such as one-time purchases, service fees, installation charges, and any other money received from customers. While MRR focuses exclusively on the stable, predictable portion of income, Revenue provides a comprehensive picture of all money flowing into the business.

A SaaS company should emphasize MRR when forecasting future growth, planning cash flow, or communicating predictability to investors, as it highlights the stable foundation of the business model. For example, when determining whether to invest in new product development or hire additional staff, a company with $500,000 in MRR can confidently plan around having at least that amount available monthly, regardless of fluctuations in one-time sales. Conversely, the same company would reference total Revenue when preparing financial statements, analyzing seasonal trends, or evaluating the success of a promotional campaign that included both subscription sign-ups and one-time purchases. If the company launched a limited-time offer that generated significant one-time implementation fees, these would substantially increase quarterly Revenue without affecting MRR, making Revenue the more appropriate metric for measuring the campaign's immediate financial impact.

Monthly Recurring Revenue

Revenue

What is it?

Monthly Recurring Revenue (MRR) is a key performance indicator (KPI) that represents the total predictable, recurring revenue a subscription-based business expects to generate every month from its active customers. It is calculated by normalizing all subscription income—regardless of the billing cycle (monthly, quarterly, or annual)—into a consistent monthly figure. MRR is a vital metric for Software-as-a-Service (SaaS) and other subscription models, providing an immediate and granular view of financial health, growth trajectory, and stability. Critically, MRR excludes all non-recurring revenue, such as one-time setup fees, consulting charges, or hardware sales, focusing solely on the reliable, repeatable income stream.

Revenue is the total income generated from a company's primary business operations before deducting any costs or expenses. Often called the "top line" because it appears at the top of the income statement, revenue represents the gross amount earned from core business activities such as product sales, service fees, subscriptions, or licensing agreements.

Who is it for?

Chief Revenue Officer

Chief Financial Officer

Sales Manager

Business Intelligence Analyst

Chief Financial Officer

Chief Revenue Officer

Chief Executive Officer

Formula

ƒ Sum(Recurring Revenue irrespective of billing interval expressed as a monthly value)

ƒ Sum(Revenue)

Example

If 10 customers are paying $150 per month, then MRR would be: MRR = $1,500 If 7 customers are paying $200 per month, and 3 customers are paying $100 per month, then MRR would be: MRR = $1,700

Revenue calculation depends on your business model and revenue recognition method. For a subscription business, if a customer signs an annual contract for $12,000 with monthly payments, you would recognize $1,000 in revenue each month over the 12-month period, totalling $12,000 for the year. For one-time sales, revenue equals the sale price multiplied by units sold. It's crucial to distinguish between cash received and revenue recognized - they may not occur in the same period depending on your accounting method.