Monthly recurring revenue (MRR) is the recurring subscription revenue expected each month from active contracts, with annual and multi-year contracts converted to a monthly amount.
A worked example
An example with round numbers. Take three customers. One pays $500 a month. One signed an annual contract at $12,000 and was invoiced upfront. One signed a two-year contract worth $48,000 in recurring charges, plus a $2,000 setup fee. MRR is $500 + $1,000 + $2,000 = $3,500. The upfront invoice does not make January a $12,000 month, and the setup fee is not recurring, so it is left out. ARR is $42,000, which is MRR times 12.
Track the movements, not just the total
A single MRR number hides what changed. Break each month into new MRR, expansion MRR (added seats, upgrades, renewal uplifts), contraction MRR (downgrades), churned MRR (cancellations) and reactivations. Starting MRR plus those movements should equal ending MRR. If it doesn't, a record is missing or a change was made outside the system. Settle two policies early: whether a signed contract counts from the signature date or the service start date, and whether a discount that expires counts at the discounted price or the full price. Write the rule down and apply it to every contract.
In Salesforce
Standard Salesforce has no MRR field and no subscription object. Opportunity Products are priced as quantity times sales price with no term, and the Contract holds dates but no value, so MRR is usually a custom field kept current with Flow or a package. Salesforce CPQ keeps each subscribed product as an SBQQ__Subscription__c record under the Contract, with the dates and quantities to compute it from. Revenue Cloud Advanced builds MRR into its asset model: AssetStatePeriod records each span in which an asset has the same quantity, amount and MRR, and an asset has as many spans as it has changes.
How Kugamon handles it
With the Subscription Management add-on, MRR is a roll-up on the standard Salesforce Contract, next to ARR, TCV, subscription count, total quantity and start and end dates. Term is part of the price: marking a product as a Service changes its pricing from price × quantity to price × quantity × term, with the unit of term usually set to Month. Releasing the Order creates Subscriptions from the service lines, and an Expansion Order updates the same Contract, so its MRR is the current view. With the Subscription Billing edition, Invoice Schedules then bill those lines monthly, quarterly, yearly or on another schedule.
Related terms
- Annual recurring revenue (ARR)
- Total contract value (TCV)
- Net revenue retention (NRR)
- Proration
- Usage-based billing
Source: developer.salesforce.com