SaaS Monthly Recurring Revenue (MRR

Venture Capital Metrics: The 5 Components of the MRR Waterfall

In recurring revenue business models, top-line growth is broken down into five distinct components:

• Beginning MRR: Baseline starting point at the 1st of the month.

• New MRR: Dollars from first-time paying subscribers.

• Expansion MRR: Extra revenue from existing customers upgrading plans or adding seats.

• Contraction MRR: Revenue lost when existing accounts downgrade to cheaper tiers.

• Churned MRR: Revenue lost when accounts cancel completely.

The SaaS Quick Ratio (Created by Mamoon Hamid)

A Quick Ratio 4.0x means a company adds at least 4.00 of new and expansion revenue for every 1.00 lost to churn and downgrades.

How to Use This Calculator

Enter your Beginning / Starting MRR () (e.g. 75000), New MRR ( from newly acquired customers) (e.g. 12000), Expansion MRR ( from existing customer upgrades & add-ons) (e.g. 4500), Contraction MRR ( from plan downgrades) (e.g. 1200 (or 0)), and Churned MRR ( from cancellations) (e.g. 2800). Results update instantly as you type — adjust any value to compare scenarios.

The Formula

SaaS Monthly Recurring Revenue (MRR) waterfall & growth metrics: New MRR = New MRR + Expansion MRR - Contraction MRR - Churned MRR MRR = Beginning MRR + Net New MRR Recurring Revenue (ARR) = Ending MRR × 12 Quick Ratio = (New MRR + Expansion MRR) / (Contraction MRR + Churned MRR) Revenue Retention (NRR \%) = ((Beginning MRR + Expansion MRR - Contraction MRR - Churned MRR) / (Beginning MRR)) × 100\%

Worked Example

For example, a SaaS startup starting the month at 75,000 MRR (900k ARR) that adds 12,000 New MRR, 4,500 Expansion MRR, loses 1,200 to Contraction, and loses 2,800 to Churn: Gross additions total \ while gross losses total . Net New MRR is growing Ending MRR to 87,500.00/month (1,050,000.00 ARR Run-Rate). The SaaS Quick Ratio is \, with an NRR of 100.67%.

Understanding Your Result

Benchmark monthly churn rates for SaaS: Best-in-class below 0.5%, good 0.5–1%, average 1–2%, above 2% requires urgent attention. Annual churn above 24% (2% monthly) means the business replaces its entire customer base every 4–5 years — growth becomes a treadmill. Net Revenue Retention (NRR) above 100% means existing customers expand faster than they churn — the most powerful growth lever available. Top-quartile SaaS companies have NRR above 120%. Monthly churn of 1% compounding annually equals 11.4% annual customer loss.