Subscription Revenue Calculator (MRR/ARR)

The Monthly Recurring Revenue (MRR) is calculated as the number of active subscribers multiplied by the average revenue per user (ARPU) per month: MRR = Subscribers × ARPU. Annual Recurring Revenue (ARR) is MRR × 12. To project MRR one year ahead, incorporate churn and signup rates. The net monthly change in subscribers is: New Subscribers per month (S) minus Churned Subscribers per month (C). Churned subscribers equal the current subscriber base times the monthly churn rate (c): C = Subscribers × c. The projected subscriber count after n months is: Subscribers_n = Subscribers_0 × (1 - c)^n + S × ((1 - (1 - c)^n) / c). Then projected MRR = Subscribers_n × ARPU. ARR = projected MRR × 12. All variables: Subscribers_0 = starting subscribers; ARPU = average monthly revenue per subscriber; c = monthly churn rate (decimal); S = new subscribers per month (assumed constant); n = number of months (usually 12). This formula accounts for compounding churn on existing base and linear addition of new subs, each of which also churns over time.

Interpreting projected MRR/ARR requires relative context. A 'good' churn rate for subscription businesses typically ranges from 3% to 7% monthly, but varies by industry and price point. Lower ARPU products often have higher churn. Growth in this metric depends on the ratio of new signups to churn: if signups exceed churn, MRR grows; if not, it declines. A healthy business often has a net negative churn (where expansion revenue from upsells offsets losses), but this calculator assumes constant ARPU. Compare your projected ARR to your current run rate to gauge sustainability. For early-stage businesses, even a small positive growth rate is encouraging; for mature ones, single-digit monthly growth may signal stagnation. Always validate assumptions with actual data—churn rates and signup volumes fluctuate.

A common mistake is using annual churn instead of monthly churn in the formula, which understates churn's compounding effect. Another is ignoring that new subscribers also churn over time—the formula accounts for this, but some users simply do 'current subs + (new subs × 12) - (churn per month × 12)', which overestimates the base. Also, assuming constant ARPU can be misleading if you have tiered pricing or upgrades. Edge cases: zero churn (divide by zero in the formula is avoided if c > 0; if c = 0, use linear growth: Subscribers_n = Subscribers_0 + S × n). Negative churn (expansion revenue) is not handled—this model assumes only subscriber loss. Finally, applying the formula to businesses with highly seasonal signups or one-time promotions will yield inaccurate projections.

Monthly Recurring Revenue (MRR)

The predictable monthly revenue from active subscribers, calculated as subscribers times average revenue per user.

Annual Recurring Revenue (ARR)

The annualized version of MRR, typically MRR × 12, used to measure long-term revenue stability.

Churn Rate

The percentage of subscribers who cancel each month, expressed as a decimal in calculations.

Average Revenue Per User (ARPU)

The average monthly revenue generated per subscriber, including all fees and upgrades.

Net New Subscribers

The difference between new signups and churned subscribers in a given period, driving MRR growth or decline.