Monthly Recurring Revenue (MRR) in Software as a Service (SaaS) refers to the predictable, recurring revenue generated by a subscription-based business model. It represents the total amount of revenue a SaaS company expects to receive from its customers on a monthly basis. It is normally expressed as a monthly figure converted into your home currency.
MRR is a key metric for SaaS companies because it provides insight into the health and growth of the business over time. It helps companies forecast revenue, evaluate customer retention, and assess the effectiveness of their pricing strategies and sales efforts.
MRR is calculated by converting subscriptions into normalised monthly amounts. So, if a subscription are paid annually then you need to divide the annual revenue by 12. Likewise if its weekly then multiply by 52 and divide by 12 and for daily just multiply by 365 and divide by 12.
$$Monthly\ Recurring\ Revenue\ ={No\ of\ Active\ Accounts\ \times\ Average\ Revenue\ Per\ Account}$$
To be accurate it should exclude non-recurring payments like setup charges and discounts.