MRR Tracking: The Complete Guide for SaaS Founders
Everything you need to know about tracking Monthly Recurring Revenue. Learn MRR calculations, components, tools, and best practices for SaaS businesses.
What is MRR and Why It Matters
Monthly Recurring Revenue (MRR) is the predictable revenue your SaaS business generates each month from active subscriptions. It's the most important metric for subscription businesses because it:
How to Calculate MRR
Basic MRR Formula
MRR = Number of Customers × Average Revenue Per Account (ARPA)
Or more precisely:
MRR = Sum of all active monthly subscription values
MRR Components
Understanding MRR components helps you identify what's driving growth or decline:
| Component | Description | Formula |
|-----------|-------------|---------|
| New MRR | Revenue from new customers | Sum of new subscriptions |
| Expansion MRR | Revenue from upgrades | Current MRR - Previous MRR (existing) |
| Contraction MRR | Revenue lost to downgrades | Previous MRR - Current MRR (existing) |
| Churned MRR | Revenue lost to cancellations | Sum of cancelled subscriptions |
| Net New MRR | Total MRR change | New + Expansion - Contraction - Churned |
Annual Contract Normalization
For annual subscriptions, normalize to monthly:
Monthly Value = Annual Contract Value ÷ 12
MRR Tracking Best Practices
1. Track MRR Daily
Don't wait for month-end. Daily tracking helps you:
2. Segment Your MRR
Break down MRR by:
3. Monitor MRR Components Separately
A flat MRR line can hide:
4. Use Automated Tools
Manual spreadsheet tracking leads to:
Common MRR Mistakes to Avoid
Mistake 1: Including One-Time Revenue
MRR should only include recurring revenue. Exclude:
Mistake 2: Not Recognizing Revenue Correctly
For annual prepaid contracts:
Mistake 3: Ignoring Downgrades
Contraction MRR is just as important as churn. Track:
MRR Benchmarks by Stage
| Stage | Good MRR Growth | Great MRR Growth |
|---|---|---|
| Pre-seed | 15%+ monthly | 20%+ monthly |
| Seed | 10%+ monthly | 15%+ monthly |
| Series A | 8%+ monthly | 12%+ monthly |
| Series B+ | 5%+ monthly | 8%+ monthly |
Tools for MRR Tracking
Basic (Free)
Intermediate ($50-200/mo)
Advanced (Enterprise)
Getting Started
1. **Audit your current MRR calculation** — Is it accurate?
2. **Identify your MRR components** — What's driving growth?
3. **Set up automated tracking** — Stop using spreadsheets
4. **Create a dashboard** — Or use AI tools for automated reports
5. **Review weekly** — Make MRR a regular conversation
The companies that grow fastest are the ones that understand their MRR deeply.