Method and assumptions
MRR should include recurring subscription revenue and exclude one-time services. Keep the same cohort and currency treatment across reporting periods.
Ending MRR = starting MRR + new MRR + expansion MRR - contraction MRR - churned MRR.
Worked scenario
Start with the recurring revenue active on the first day of a closed month. Reconcile new subscriptions, upgrades, downgrades and cancellations to billing events, then exclude setup work, usage overages that are not committed and taxes. Run the bridge separately by plan or customer segment before combining it into company MRR.
How to interpret the result
Ending MRR should equal the recurring run rate visible in billing after the period closes. Net new MRR explains the movement, while growth rate gives scale context. A positive result can still hide high gross churn when new sales replace lost customers, so review the five bridge components rather than only the ending balance.
Input reference
- Currency
- Example default: USD
- Starting MRR
- Example default: 50000
- New MRR
- Example default: 8000
- Expansion MRR
- Example default: 2500
- Contraction MRR
- Example default: 1200
- Churned MRR
- Example default: 1800
Common mistakes
- Counting implementation fees or non-recurring usage as MRR.
- Using contract value before service has started.
- Letting currency conversion create apparent growth.
Before using the result
- Reconcile every movement to billing or contract events.
- Keep plan, currency and tax treatment stable across periods.
- Review gross churn beside net new MRR.
Questions to check before deciding
Should one-time setup fees count as MRR?
No. Keep one-time implementation or setup fees outside MRR.
What is expansion MRR?
Expansion includes upgrades or add-ons from existing customers.
Independent planning calculator. Not financial, tax, legal or investment advice.