MRR and ARR Calculator (Recurring Revenue)
Written by Thierno Sadou Diallo, formula verified per our methodology • Last checked on 9/10/2026
MRR is calculated with number of active customers × average revenue per customer per month. For 500 customers at €29/month, MRR is €14,500 and ARR (MRR × 12) is €174,000.
Explanation
Monthly recurring revenue (MRR) is the central metric for subscription businesses: it represents the predictable revenue that renews each month as long as customers stay subscribed, calculated simply by multiplying the number of active customers by the average revenue each generates per month (ARPU, average revenue per user). Annual recurring revenue (ARR) is its twelve-month projection — a simple MRR × 12, not to be confused with the revenue actually collected over the year, which depends on how the customer count evolves month after month. This calculator adds a third dimension, the effect of churn: each month, a share of customers cancels their subscription, which erodes MRR if new sign-ups don't compensate. A monthly churn rate of 3% on a €14,500 MRR represents €435 of recurring revenue lost every month, which must be won back through acquisition just to keep MRR at breakeven — a direct link to our user retention rate calculator and our customer lifetime value calculator, the latter metric depending precisely on the average subscription duration, itself the mirror image of the churn rate.
Example: 500 customers at €29/month, 3% churn
Inputs
Active customers: 500. Average revenue per customer per month: €29. Monthly churn: 3%.
Calculation
MRR = 500 × 29 = €14,500. ARR = 14,500 × 12 = €174,000. MRR lost to churn = 14,500 × 3% = €435. MRR retained = 14,500 − 435 = €14,065.
Result
This business generates €14,500 in MRR (€174,000 ARR), of which €435 is lost every month to churn.
Frequently asked questions
Why isn't ARR the year's actual revenue?
ARR is a snapshot: it's the current MRR multiplied by 12, as if the customer count stayed frozen all year. Revenue actually collected instead depends on the trajectory of the customer count over the months — a business that goes from 500 to 1,000 customers during the year collects revenue very different from its ARR at either the start or the end of the year.
Should one-time payments be included in MRR?
No, by definition MRR only counts recurring, predictable subscription revenue. One-time setup fees, consulting billed by the hour, or exceptional sales are not part of MRR: including them would artificially inflate a metric whose whole point is precisely its predictability.
How does an annual subscription translate into MRR?
A subscription paid annually is normalized into MRR by dividing its amount by 12: a customer paying €348 per year counts as €29 of MRR. This normalization allows comparing customers on different billing cycles (monthly, quarterly, annual) on the same basis.