Monthly Recurring Revenue (MRR)

Last updated September 09, 2026

Definition

Monthly recurring revenue is the sum of all contracted, repeating monthly fees – managed service agreements, seat and device subscriptions, resold licensing, hosted services – normalized to a single month. Project work, hourly billing, hardware sales, and one-time onboarding fees are excluded, however large they are.

Why it matters to an MSP

MRR is what separates a managed service provider from a break/fix shop with a website. Recurring fees are what let you plan: they cover payroll before the month starts, tell you when the next technician is affordable, and turn a cash-flow forecast into something better than a guess. Hire against contracted MRR, never against pipeline – a first technician is safe once MRR covers the loaded salary plus tools with margin to spare, and a business is genuinely "managed" once recurring revenue passes half of total revenue and rests on per-seat or per-device agreements rather than bundled hours.

It is also what the business is worth. Buyers value MSPs on recurring revenue and the profit it produces – typically 4–7x EBITDA for small firms as of 2026, more for larger ones – and discount project and hardware revenue heavily or ignore it. Track MRR with its derivatives: net new MRR (added minus lost each month), churn rate measured as lost MRR rather than lost logos, MRR per seat and per technician, and gross margin on MRR (50–60% blended is the typical healthy range; disciplined shops target 70% on the managed services line). Keep these in your PSA's contracts module, not a spreadsheet, because the contract terms make the number real: auto-renewal, annual escalators, and minimum seat counts in the MSA stop MRR from quietly shrinking. When growth stalls, fix pricing or sales before adding headcount.