MRR, and what it's really telling you
MRR is the heartbeat of a subscription business — but the headline figure hides the movement underneath. Here's how to calculate it, turn it into ARR, and read the retention it implies.
How MRR is calculated
The quickest route is customers times what each pays you per month. Then the bridge shows how that number moved across the month — new, expansion, contraction, churn.
MRR = Customers × ARPA
Ending MRR = Beginning + New + Expansion − Contraction − Churned
From MRR to ARR
ARR is just MRR annualised: ARR = MRR × 12. Use MRR to track month-to-month momentum and ARR for planning and board reporting. Want the full annual bridge with growth-by-stage context? Open the ARR calculator.
The retention your MRR implies
Net Revenue Retention is what last month's customers are worth now — expansion in, contraction and churn out — as a share of where they started. Above 100%, your base grows on its own. Read it with Gross Revenue Retention, which strips out expansion to show how leaky the bucket is underneath.
Leaky — You're losing more than you keep — churn is eating into growth.
Healthy — Solid retention — your base holds, but growth leans on new business.
Strong — Expansion is clearly outpacing churn and contraction.
Best-in-class — Top-decile SaaS retention — expansion is compounding your base.
Churned MRR is the leak you can plug
Churned MRR is small each month and brutal compounded — every dollar lost is twelve out of next year's ARR. The most preventable cause is slow, frustrating support: customers leave after a string of unanswered tickets, not one bad day. Faster replies and follow-up at scale is the cheapest way to keep the bridge climbing. See how Selvo's AI agent does it.
