MRR answers one simple question: "If I did nothing else, how much recurring revenue would come in next month?"
But here's the problem—most startups get this calculation wrong.
MRR should exclude one-time payments, pilot projects, and professional service fees, even if they made your books look good that month. ARR gives you the annualized picture, but simply multiplying current MRR by 12 assumes every customer stays all year with no churn.
Here's what matters: