Turn your customer count and average subscription price into monthly and annual recurring revenue, and project growth over the next year.
Monthly recurring revenue (MRR) and annual recurring revenue (ARR) are the heartbeat metrics of any subscription business. They measure the predictable, repeatable revenue you can count on each period — the foundation for forecasting, hiring, and fundraising decisions.
MRR = Number of Customers × Average Monthly Revenue per Customer. With 200 customers paying an average of $50/month, MRR is $10,000. ARR is simply MRR × 12, or $120,000 in this example. ARR is the standard way to describe the run-rate of a subscription business.
Recurring revenue compounds. Applying a steady monthly growth rate g, projected MRR after n months is MRR × (1 + g)^n. A 5% monthly growth rate turns $10,000 MRR into roughly $17,959 within a year — an 80% annual increase from compounding alone. Small monthly gains add up quickly.
Tip: Real MRR moves from four forces: new customers, expansion (upgrades), contraction (downgrades), and churn (cancellations). Net new MRR is new + expansion − contraction − churn. Watch all four, not just the headline number.
Investors prize recurring revenue because it is predictable and compounds, which is why SaaS businesses are often valued on ARR multiples. Keeping churn low is essential — every lost customer reduces the base that future growth builds on. Use this projection as a simple planning model, then refine it with your actual retention and expansion data.