Hupspot Guide to Monthly Recurring Revenue
Hubspot style sales content often emphasizes predictable revenue, and nothing is more central to that goal than monthly recurring revenue (MRR). Understanding, calculating, and improving MRR helps you build reliable forecasts, grow efficiently, and make smarter decisions for any subscription-based business.
This guide walks you through what MRR is, how to calculate it, common types of MRR, and practical steps to improve it using a structured, Hubspot-inspired framework.
What Is Monthly Recurring Revenue?
Monthly recurring revenue is the predictable revenue you expect to receive every month from active subscriptions and ongoing customer contracts. It excludes one-time or irregular payments and focuses only on recurring charges.
MRR is especially valuable for:
- SaaS companies
- Membership and subscription businesses
- Service retainers and recurring contracts
By tracking MRR, you can monitor growth, measure churn, and align your sales, marketing, and customer success efforts around consistent revenue targets.
Core Monthly Recurring Revenue Formula
The basic formula for monthly recurring revenue is straightforward and similar to what you’d find in a Hubspot revenue playbook:
MRR = Number of Active Customers × Average Revenue per Account (ARPA)
For example, if you have 100 active customers paying an average of $50 per month, your MRR is:
MRR = 100 × $50 = $5,000
While the simple formula is useful for a quick snapshot, serious forecasting requires a closer look at how different changes in your subscriptions affect the total.
Types of Monthly Recurring Revenue
Breaking MRR into segments gives you a deeper view of how your business is performing. These categories mirror many frameworks used in Hubspot-style sales analytics.
New MRR
New MRR is the additional recurring revenue gained from brand-new customers within a specific month.
New MRR = Sum of first full month subscription fees from new customers
Tracking New MRR helps measure the effectiveness of your acquisition strategies and sales pipeline.
Expansion MRR
Expansion MRR is revenue gained from existing customers who upgrade, purchase add-ons, or expand their usage.
Examples include:
- Upgrading from a basic to a premium plan
- Adding more seats or users
- Buying recurring add-on features
Healthy Expansion MRR indicates strong product-market fit and successful account management.
Contraction MRR
Contraction MRR is the loss in recurring revenue when existing customers downgrade or reduce their contracts.
Common sources of contraction include:
- Downgrades to a cheaper plan
- Removing users or features
- Applying long-term discounts
Monitoring Contraction MRR highlights accounts that may be at risk of churning.
Churn MRR
Churn MRR is the recurring revenue lost when customers cancel their subscriptions completely.
Churn MRR = Sum of monthly subscription value from all canceled accounts
High Churn MRR limits your ability to grow, even if New MRR is healthy, so it is critical to track and address.
Calculating Net Monthly Recurring Revenue
To understand true growth, you should combine the different MRR components into one metric: Net New MRR.
Net New MRR = New MRR + Expansion MRR – Contraction MRR – Churn MRR
This formula shows how much your recurring revenue actually changed in a given month once all gains and losses are included.
For example:
- New MRR: $5,000
- Expansion MRR: $2,000
- Contraction MRR: $500
- Churn MRR: $1,000
Net New MRR = 5,000 + 2,000 – 500 – 1,000 = $5,500
A positive Net New MRR means your recurring revenue base is growing, while a negative number signals potential retention or pricing issues.
How to Calculate Monthly Recurring Revenue Step by Step
Use this simple process to calculate MRR accurately, modeled on structured sales operations methods similar to those promoted by Hubspot.
1. List All Active Subscriptions
Start by compiling every active subscription for the month. Each row should include:
- Customer name or ID
- Plan type
- Monthly price
- Start date
- Any upgrades, downgrades, or cancellations
2. Normalize to Monthly Amounts
If you offer different billing cycles, convert them into monthly amounts:
- Annual plan at $1,200 becomes $100 MRR
- Quarterly plan at $300 becomes $100 MRR
This ensures all subscriptions are comparable.
3. Sum Total Monthly Recurring Revenue
Add up the normalized monthly value for all active subscriptions to get total MRR for the period.
Optionally, break this total down by:
- Product line or plan tier
- Customer segment (SMB, mid-market, enterprise)
- Region or industry
4. Segment by MRR Type
To calculate Net New MRR, segment subscriptions into:
- New accounts that started this month
- Existing accounts that upgraded or expanded
- Accounts that downgraded
- Accounts that canceled
Then apply the Net New MRR formula to see true growth.
Using a Hubspot-Inspired Framework to Improve MRR
A structured, Hubspot-like approach to revenue management focuses on aligning marketing, sales, and customer success around MRR growth. Use these strategies to strengthen your recurring revenue.
Optimize Pricing and Packaging
Clear pricing tiers make it easier for customers to find the right plan and upgrade over time.
- Offer a simple entry-level plan
- Create mid-tier and premium plans with meaningful feature differences
- Test pricing changes using cohorts and time-bound experiments
Increase Expansion MRR
Encourage account growth by designing upsell and cross-sell paths:
- Introduce add-ons or higher tiers for power users
- Use in-app prompts to highlight value of upgrades
- Train sales and success teams to identify expansion opportunities
Reduce Churn and Contraction
Reducing churn MRR often has a bigger impact than simply adding new customers.
- Collect feedback during cancellation and downgrade flows
- Offer save offers or flexible plans for at-risk accounts
- Invest in onboarding and customer education
Align Teams Around Monthly Recurring Revenue
Many Hubspot success stories highlight cross-team alignment on revenue metrics. Do the same by:
- Reporting MRR and Net New MRR regularly
- Sharing churn and expansion insights across teams
- Connecting compensation or bonuses to sustainable MRR growth
Key Metrics to Track Alongside MRR
MRR is powerful, but it becomes even more actionable when paired with a few related metrics.
- Customer Churn Rate: Percentage of customers lost in a period.
- Revenue Churn Rate: Percentage of MRR lost from existing customers.
- Customer Lifetime Value (LTV): Estimated total revenue from an average customer over their relationship with you.
- Customer Acquisition Cost (CAC): How much it costs to acquire a new customer.
Comparing LTV to CAC shows whether your MRR growth is sustainable.
Learn More About Monthly Recurring Revenue
For a deeper dive into examples, formulas, and use cases, review the original article on monthly recurring revenue on the Hubspot blog: Monthly Recurring Revenue Guide.
If you need expert help building a strategy around MRR, SEO, and content that aligns with a Hubspot-style growth engine, you can also explore consulting services at Consultevo.
By tracking monthly recurring revenue carefully, breaking it into clear components, and aligning your teams and pricing around predictable income, you can create a scalable, data-driven growth strategy for any subscription-based business.
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