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How we calculate MRR

How we calculate MRR

Simon avatar
Written by Simon
Updated over 3 weeks ago

In Kaching Subscriptions, we calculate MRR by normalizing each subscription’s billing frequency to a monthly value. This allows a consistent way to compare revenue across daily, weekly, monthly, and yearly subscriptions.

We look at every active subscription contract and convert its billing price into a monthly equivalent. Here’s how:

  • Daily subscriptions

    Multiply the price by 30.437 (average days per month) and divide by the billing interval count.

    Example: $10 per day → $10 × 30.437 = $304.37 MRR

  • Weekly subscriptions

    Multiply the price by 4.345 (average weeks per month) and divide by the billing interval count.

    Example: $20 per week → $20 × 4.345 = $86.90 MRR

  • Monthly subscriptions

    Divide the price by the billing interval count.

    Example: $60 every 2 months → $60 ÷ 2 = $30 MRR

  • Yearly subscriptions

    Divide the price by the billing interval count, then divide again by 12 months.

    Example: $120 per year → $120 ÷ 12 = $10 MRR

What’s included in MRR

  • Line item prices → the base subscription product(s)

  • Shipping costs → if part of the recurring charge

Example

Imagine you have these 4 subscriptions:

Subscription

Billing Plan

Price

MRR Contribution

Customer A

Daily

$10

$304.37

Customer B

Weekly

$20

$86.90

Customer C

Every 2 months

$60

$30.00

Customer D

Yearly

$120

$10.00

MRR = $304.37 + $86.90 + $30.00 + $10.00 = $431.27

While MRR is a great way to understand your recurring revenue run-rate, it doesn’t reflect the exact timing of charges. For a more precise view of upcoming cash flow, check out our guide on Expected collections next 30 days.


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