MRR is the single most important number in a subscription business. Here is how to track it correctly, what it tells you, and which related metrics actually matter for a solo founder.
Monthly Recurring Revenue is the number that tells you whether your subscription business is growing, flat, or dying. Tracking it correctly — and understanding what it doesn't tell you — is the foundation of every good business decision you'll make as a solo founder.
MRR is the normalised monthly revenue from all active subscriptions. It is not the cash you received this month. It is not your revenue run rate. It is the predictable, recurring portion of your revenue if nothing changes.
A customer on an annual plan who paid $948 upfront contributes $79/month to MRR — not $948 in month one and $0 for the next 11. This normalisation is what makes MRR useful for trend analysis.
New MRR: revenue from new customers acquired this month. Expansion MRR: revenue from existing customers who upgraded. Contraction MRR: revenue lost from customers who downgraded. Churned MRR: revenue lost from customers who cancelled. Net New MRR = New + Expansion − Contraction − Churned.
The formula: Net New MRR = New MRR + Expansion MRR − Contraction MRR − Churned MRR. Your total MRR at end of month = MRR at start of month + Net New MRR.
Most early-stage indie SaaS products don't have expansion or contraction MRR — they have flat pricing. In that case: MRR = (number of active monthly subscribers × monthly price) + (number of active annual subscribers × annual price ÷ 12).
Stripe Dashboard — if you're using Stripe, your MRR is visible directly in the dashboard under Revenue. It calculates normalisation automatically. Start here.
Baremetrics — connects to Stripe and provides MRR, churn, LTV, and cohort analysis in one dashboard. $58/month. Worth it once you have 20+ paying customers and need cohort data.
ChartMogul — similar to Baremetrics. Free up to $10k MRR. Good starting point for indie founders who want analytics without the Baremetrics cost at early stage.
A spreadsheet — completely valid for the first 6 months. Track new customers, churned customers, and plan types. Calculate MRR monthly. The discipline of manual tracking forces you to understand the numbers in a way that a dashboard doesn't.
| Metric | What it tells you | Red flag |
|---|---|---|
| Monthly churn rate | % of MRR lost per month | Above 8% |
| Trial-to-paid conversion | % of trials that convert to paid | Below 15% |
| LTV (Lifetime Value) | Average revenue per customer | Below 3× CAC |
| MRR growth rate | Month-over-month % growth | Flat for 2+ months |
| ARR (Annual Run Rate) | MRR × 12 | Context only — not a decision metric |
MRR growing month-over-month at 10%+: you have something working. Double down on whatever is driving acquisition. Do not change the product. Do not add features. Feed the machine.
MRR flat for 2+ months: you have a churn problem or an acquisition problem. Check churned MRR vs new MRR. If they're roughly equal, you're running to stand still. The fix depends on whether churn or acquisition is the constraint.
MRR declining: diagnose churn first. What is the churn rate? When is churn happening (first 14 days, weeks 2–8, or later)? Each timing indicates a different problem and a different fix.
Tell Marcus your current MRR, churn rate, and where you're stuck. You'll get a specific diagnosis and one action to take this week.
Try GhostCoach free →14-day free trial · cancel anytime