Academy · Lesson 6 · MRR and ARR
MRR is a month's recurring revenue,
not what landed in the bank account.
Monthly recurring revenue (MRR) is the sum of all running subscriptions and retainers, normalised to one month. ARR is the same figure scaled to a year. This lesson shows what belongs in it, how to split the month-over-month change into five movements, and why incoming payments are not MRR.
Where do you want to make progress?
Contract list with term and amount
MRR is a month's recurring revenue,
not what landed in the bank account.
Start + new + expansion − contraction − churn = end.
Monthly recurring revenue (MRR) is the sum of all running subscriptions and retainers, normalised to one month. ARR is the same figure scaled to a year. This lesson shows what belongs in it, how to split the month-over-month change into five movements, and why incoming payments are not MRR. Example (fictional): €20,000 MRR at the start of the month, +€1,800 new, +€600 expansion, −€300 contraction, −€900 churned gives €21,200 MRR at month end. ARR = €21,200 × 12 = €254,400.
What you need.
- A contract list with customer, amount, billing cycle and start/end date.
- Retainers and projects kept apart; only retainers count.
- Income from receipts as a cross-check, not as MRR.
- MRR at start: sum of normalised contracts (example €20,000)
- New · expansion: new customers · higher contracts (example +€1,800 · +€600)
- Contraction · churn: lower contracts · ended ones (example −€300 · −€900)
- MRR at end · ARR: end × 12 (example €21,200 · €254,400)
The learning path
Normalise, break down, scale up.
Normalise
Convert every running contract to a monthly amount: a monthly plan as is, an annual contract ÷ 12, a quarterly one ÷ 3. Recurring parts only, in one currency.
- Contract list with term and amount
- Annual contracts ÷ 12, one-off fees out
- MRR of €20,000 at the start of the month
MRR of €20,000 at the start of the month
If you get stuck
When the number doesn't fit.
Cash in instead of MRR
An annual contract of €12,000 brings €12,000 in January, but only €1,000 MRR per month. Summing payments shows a January jump that is not growth.
Mixed currencies
Don't add contracts in euros and francs without a fixed rate. Calculate per currency or with a documented rate per month.
What Peak Analytics does today
MRR, churn and LTV from subscription data are planned, not built. Today the preview sums income from receipts per counterparty and month. That is cash in, not MRR, but it helps you reconcile your contract list.
Your quality check
Before you apply it to your numbers.
Tick what you have checked. Your selection stays in this view only.
0 of 3 points checked
What this article is based on.
Editorial page with fictional examples (Taktwerk Software (fictional), Harbourview Agency (fictional), Willowcourt Advisory (fictional)). The guide describes an approach; where Peak Analytics covers a step today, the page says so explicitly. No measurements, no customers, nothing is sent or saved.
- Editorial demo
Synthetic numbers in the browser. No real data is read, computed or saved.
- Checked evidence
Peak Analytics is a preview: pivot over orders, receipts, tasks, goals and files; count, sum, average, minimum, maximum; day to year; CSV export; sharing a released snapshot; largest value as a task.
peak-one app/w/[scope]/apps/analytics, lib/bi/model.ts, lib/views/pivot.ts, lib/bi/share.ts · checked 2026-10-29
Recurring means comparable, month after month.
With MRR, cohorts and retention you have what you need for LTV, which you calculate yourself in the LTV/CAC guide.
Frequently asked questions
Do I need Peak Analytics for this lesson?
No. The lesson works with any spreadsheet. Peak Analytics is a preview; where it covers a step today, the page says so.
What does not belong in MRR?
One-off fees, projects, refunds and fluctuating usage revenue. An annual contract counts with one twelfth per month.
How do MRR and ARR relate?
ARR is month-end MRR times twelve. It is a snapshot, not a forecast.
Does Peak Analytics calculate MRR?
Not yet. MRR, churn and LTV from subscription data are planned. Today the preview sums income from receipts per month; that is cash in, not MRR.