Recurring revenue
Strategy and planning
Strategy and planning
Recurring revenue is revenue that returns periodically under an agreement: subscriptions, licences, retainers or a fixed monthly fee for services.
The difference from one-off revenue is predictability: at the start of the month you largely know what is coming in. That makes planning, investing and hiring far calmer.
Measure recurring per month (MRR) or per year (ARR) and always pair it with churn: revenue that returns but leaks away just as fast is not growth.
ARR stands for annual recurring revenue: recurring revenue on a yearly basis. It is the figure you see most in software companies and funding news. You calculate it simply as MRR × 12, excluding one-off fees such as setup or implementation.
Tip
Only count revenue under a running agreement or contract as recurring. That keeps your picture sharp, even when a client comes back often without a fixed agreement — that is repeat revenue instead.
Related terms
- MRR and ARRMRR is your recurring monthly subscription revenue, ARR is the same revenue annualised. One-off projects don't count.
- Subscription modelA subscription model is a pricing form where customers pay periodically for access or delivery instead of per purchase.
- ChurnChurn is the share of customers or subscribers leaving within a period. It's the counterpart of retention.
- Customer lifetime valueCustomer lifetime value is the total margin you earn from an average customer for as long as they stay, not just on the first purchase.