How SaaS startups calculate a “monthly recurring revenue”

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To calculate your monthly recurring revenue, you simply multiply your total number of paying users by the average revenue per user (ARPU)

If client subscription start second quarter of 2019 and end second quarter 2020 and the total sum of subscription is $10,000 (ARR) Annual Recurring Revenue.

MRR =$10,000 OF ARR/12

$10,000/12

MRR = $833.3

When cancellations, upgrades/downgrades, and discounts occur (Attrition or Churn) it will reduce the MRR Value.

Let assume Attrition or Churn are 5%

Attrition or Churn =$833.3-5%=$791.4