MRR (monthly recurring revenue) and ARR (annual) are the heartbeat of subscription businesses. Sum active monthly subscriptions for MRR; multiply by 12 for ARR.
The example
$25,000 in monthly fees.
| A | B | |
|---|---|---|
| 1 | Item | Value |
| 2 | MRR | 25000 |
| 3 | × 12 → ARR | → $300,000 |
The formula
The formula:
How it works
How it works:
- MRR = sum of all active monthly subscription fees — normalize annual plans to monthly first.
SUMIF(status, "Active", monthly_fee)totals only live subscriptions.- ARR =
MRR × 12— the annual run-rate. - Track new, expansion, and churned MRR separately to explain the movement month to month.
Normalize to monthly first. An annual plan billed at $1,200 contributes $100 to MRR, not $1,200. Convert every plan to its monthly-equivalent fee before summing, or annual deals will wildly overstate MRR. The classic MRR bridge — new + expansion − contraction − churn — then explains exactly why MRR moved.
Try it: interactive demo
Monthly recurring revenue.
Variations
Active MRR (SUMIF)
Live subs only:
Annual plan to MRR
Normalize:
Net new MRR
The bridge:
Pitfalls & errors
Normalize plans. Convert annual/quarterly fees to monthly before summing into MRR.
Active only. Exclude churned and trial accounts from MRR.
One-time fees aren’t recurring. Setup or services revenue isn’t MRR.
Practice workbook
Frequently asked questions
How do I calculate MRR and ARR in Excel?
How do I handle annual plans in MRR?
What is net new MRR?
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