Monthly Recurring Revenue is the single most important number in SaaS. It drives valuation multiples, board conversations, and hiring decisions. And most companies get it wrong.
Not catastrophically wrong — usually off by 5–15%. But when you're running at $8M ARR and your MRR is overstated by 12%, you're making decisions on a phantom $960K. That gap compounds into bad forecasts, misallocated spend, and uncomfortable conversations with investors.
Here are the five most common mistakes we see.
1. Counting trial subscriptions as MRR
Stripe reports trial subscriptions as active. If you pull "active subscriptions" from the API and multiply by price, you're counting revenue from customers who haven't paid yet — and statistically, 40–60% of them never will.
The fix: filter by status = active AND trial_end < now, or only count subscriptions where at least one successful payment has been collected.
2. Annual plan normalization errors
A customer paying $12,000 annually contributes $1,000/mo to MRR. Simple division. But what happens when they upgrade mid-cycle? Or when they get a 2-month free promotion? Or when the contract includes usage-based overages?
We've seen companies that normalize annual plans at the invoice level (dividing the last invoice by months remaining) instead of the subscription level (dividing the annual price by 12). The difference can be 8–20% depending on your mix of monthly vs. annual customers.
3. Multi-currency conversions at the wrong time
If you have customers paying in EUR, GBP, and USD, when do you convert? At the time of subscription creation? At the time of each invoice? At today's exchange rate?
Most billing tools convert at invoice time. But MRR is a point-in-time metric — it should reflect what you'd collect today if every subscription renewed. That means converting at today's rate, every day. The difference between "invoice-time conversion" and "daily spot conversion" can swing MRR by 3–7% for companies with 30%+ international revenue.
4. Not handling prorations correctly
Customer upgrades from $49/mo to $199/mo mid-cycle. Stripe creates a prorated invoice for the remaining days. If you count that prorated invoice as a full month of $199, you've double-counted. If you ignore it entirely, you've missed the expansion.
The correct approach: on the day of upgrade, MRR changes from $49 to $199. The prorated invoice is a billing event, not an MRR event. These are different things, and conflating them is the #1 source of MRR/cash divergence.
5. Ghost subscriptions and duplicates
Stripe doesn't deduplicate customers. If the same person signs up with two email addresses, you have two active subscriptions for one customer. Entity resolution across your billing system, product database, and CRM is the only way to catch these.
We built Vesh AI specifically for this problem. Our entity resolution engine matches records across Stripe, Postgres, and other sources using fuzzy matching on names, emails, and behavioral signals. We've found that the average SaaS company has 3–8% duplicate or ghost subscriptions inflating their MRR.
The bottom line
MRR isn't a number you pull from an API. It's a computed metric that requires normalization rules, currency handling, proration logic, and entity resolution across sources. Getting it wrong by 10% means your churn rate, LTV, and net revenue retention are all wrong too — because they all derive from MRR.
The good news: once you fix the calculation, everything downstream gets more accurate. And you stop making million-dollar decisions on phantom revenue.