Revenue is vanity, MRR is sanity. This calculator breaks down your recurring revenue into the five components that actually matter — new, expansion, churned, contraction, and net new — and shows you the NRR investors look at first.
MRR waterfall
NRR benchmarks
MRR and ARR — the only revenue metrics that matter
Revenue is vanity, MRR is sanity. Here's how to calculate it correctly and what the numbers tell you about the health of your business.
The five components of MRR
MRR isn't one number — it's five numbers working together. Understanding each component tells you exactly where your revenue is coming from and where it's leaking.
| Component | What it measures | Why it matters |
|---|---|---|
| New MRR | Revenue from new customers | Your acquisition engine output |
| Expansion MRR | Upsells, cross-sells, upgrades | How well you grow accounts |
| Churned MRR | Revenue from cancelled accounts | The leak in your bucket |
| Contraction MRR | Revenue lost to downgrades | Often a warning sign before full churn |
| Reactivation MRR | Revenue from returning customers | Sometimes the easiest MRR to win |
Net Revenue Retention: the metric investors love most
NRR above 100% means your existing customers are generating more revenue over time — even without new sales. Companies with 120%+ NRR can grow even if they stop acquiring new customers. That's the ultimate sign of product-market fit and customer value alignment. See how we help SaaS companies hit these benchmarks.
Frequently asked
What is the difference between MRR and ARR?
MRR (Monthly Recurring Revenue) is the predictable revenue your business generates every month from active subscriptions. ARR (Annual Recurring Revenue) is simply MRR x 12. Both metrics exclude one-time fees, setup costs, and usage-based revenue. SaaS investors typically care more about ARR for valuation purposes, but operators track MRR weekly to spot trends faster.
How do you calculate MRR correctly?
Net New MRR = New MRR + Expansion MRR - Churned MRR - Contraction MRR. Many founders make the mistake of only tracking gross MRR (total monthly subscription revenue), which hides what is actually happening with the business. The true health metric is Net New MRR — how much your recurring revenue grew or shrank this month.
What is Net Revenue Retention (NRR)?
NRR measures how much your existing customer cohort is growing or shrinking, excluding new customer acquisition. Formula: NRR = ((Starting MRR + Expansion MRR - Churned MRR - Contraction MRR) / Starting MRR) x 100. NRR above 100% means your existing base is expanding (best-case: 110-130%). NRR below 100% means you are losing more revenue from existing customers than you are growing.
Should I include one-time fees in MRR?
No. MRR should only include recurring subscription revenue. Setup fees, professional services, one-time training, and consulting should be excluded. Including them inflates your numbers temporarily but creates noise that makes it harder to spot real trends. If you want to track those revenue streams, use a separate "Total Revenue" or "Bookings" metric.