Monthly Recurring Revenue (MRR)
Monthly Recurring Revenue (MRR) is the total predictable revenue a subscription business earns from all active subscriptions in a given month, normalized to a monthly amount.
MRR — Monthly Recurring Revenue — is the heartbeat metric of every subscription business. It tells you, at a glance, how much predictable revenue you can count on this month. Here’s the formula, the components, and how it’s tracked on Shopify.
The MRR formula
The basic calculation is straightforward:
- MRR = Number of active subscribers × Average revenue per subscriber per month (ARPU)
A worked MRR example
Suppose a Shopify supplements store has three subscription tiers at the end of the month:
- 400 subscribers on a $25/month plan = $10,000
- 250 subscribers on a $40/month plan = $10,000
- 50 subscribers on a $300/year plan = $1,250 (annual price ÷ 12)
MRR formula variants
There are three formulas you’ll see in practice — they answer different questions. Use the calculator below to model your own store:
| Formula | Calculation | Use it to |
|---|---|---|
| Simple MRR | Active subscribers × ARPU | Get a quick total |
| Sum-by-tier MRR | Σ (subscribers × plan price) | Handle multiple price points accurately |
| Net new MRR | New + Expansion − Contraction − Churned | See whether you grew this month |
Use the interactive mrr calculator on this page to model the numbers.
The components of MRR, mapped to Shopify events
MRR isn’t a single number — analysts break its month-over-month movement into parts. On a Shopify store each maps to a concrete subscription event:
| MRR type | What it is | Shopify subscription event |
|---|---|---|
| New MRR | Revenue from new subscribers | First subscription order placed |
| Expansion MRR | More revenue from existing subscribers | Upsell, added product, quantity bump, bundle |
| Contraction MRR | Lost revenue from downgrades | Reduced frequency or cheaper plan |
| Churned MRR | Lost revenue from cancellations | Cancelled or failed/lapsed payment |
| Reactivation MRR | Returning subscriber revenue | Win-back of a previously churned customer |
Common MRR mistakes (ecommerce edition)
MRR is easy to overstate. The traps that hit Shopify merchants specifically:
- Counting one-time orders as recurring revenue — only subscription orders are MRR.
- Booking prepaid 3/6/12-month plans at full value instead of normalizing to a monthly figure.
- Counting a discounted first order at full price instead of the real recurring price.
- Ignoring failed/dunning payments, which quietly become churned MRR if not recovered.
- Including shipping and tax — MRR is the subscription price only.
Net new MRR
Net new MRR = New MRR + Expansion MRR − Contraction MRR − Churned MRR. When this number is consistently positive, your subscription business is growing even before you acquire a single new customer.
Why MRR matters more than total sales
Total sales bounce around with promotions, seasonality, and one-time orders. MRR strips all of that away to reveal the durable, predictable core of the business — the number investors and operators use to forecast cash flow and value the company. Multiply MRR by 12 and you get Annual Recurring Revenue (ARR).
Tracking MRR on Shopify
Because MRR depends on knowing which orders are recurring, Shopify merchants need a subscription app to calculate it accurately. RecurX reports live MRR — broken into new, expansion, and churned components — so you can see exactly what is driving growth, and its dunning engine protects MRR by recovering failed subscription payments automatically.
Frequently asked questions
What does MRR mean?
In subscription commerce, MRR stands for Monthly Recurring Revenue — the predictable revenue a business earns from all active subscriptions in a given month. (Note: MRR can also mean “Master Resell Rights” in digital products, and “MMR” is matchmaking rating in gaming — different concepts entirely.)
What is the difference between MRR and ARR?
MRR is recurring revenue expressed per month; ARR is the same figure expressed per year (ARR = MRR × 12). MRR is used for month-to-month operating decisions, while ARR is used for annual planning and valuation.
Is MRR the same as total revenue?
No. MRR counts only recurring subscription revenue, normalized to a month. Total revenue also includes one-time purchases, shipping, and taxes, so it is usually larger and more volatile than MRR.
How do you calculate MRR with annual plans?
Normalize annual plans to a monthly figure: divide the annual price by 12 and add it to MRR. A $300/year plan contributes $25 to MRR.
Does a failed payment reduce MRR?
If the payment ultimately fails and the subscription lapses, yes — it becomes churned MRR. This is why automated payment recovery (dunning) is one of the highest-leverage ways to protect MRR.
Launch Shopify subscriptions without RecurX transaction fees
Start free on Shopify, or book a migration audit before changing subscription apps.