How To Measure Recurring Revenue In Salesforce
Your complete guide to tracking recurring revenue in Salesforce, and why it's critical for subscription businesses.
Last updated December 22, 2025
At a Glance
Recurring revenue is the most critical metric for any subscription-based business - yet it's also one of the most misunderstood. When teams define MRR and ARR differently, forecasts become unreliable, performance is harder to measure, and strategic decisions suffer.
This article breaks down everything about recurring revenue and how to track it accurately in Salesforce, providing you with a clear view of future revenue and business performance.
Let's dive in, starting with a clear definition.
What Is Recurring Revenue?
Recurring revenue is a financial measure that tracks historical income and quantifies future predictable revenue from products and services usually sold on a subscription basis. Many businesses selling software-as-a-service (SaaS) subscriptions refer to this predictable income as Monthly Recurring Revenue (MRR) or Annual Recurring Revenue (ARR).
However, it's not only SaaS businesses. If you sell maintenance contracts, service agreements, or any other product or service on a subscription basis, detailed MRR and ARR metrics play a critical role in measuring and growing your revenue.
Naturally, you often sell other products and services alongside subscription-based items. These can include setup and implementation services, training, or hardware and equipment the subscription product needs.
However, these additional items do not count towards your recurring revenue metrics because they are one-off services the customer does not need on an ongoing basis.
Why Is Recurring Revenue Critical?
Growth in recurring revenue is the most critical measure of success if you run any business selling products and services using subscriptions.
There are three reasons for this.
- Recurring revenue is a holistic measure that reflects all the variables driving your subscription income. The metric includes, for example, sales to new and existing customers and cancellations or downticks in the money spent by existing customers. Of course, you'll want detailed metrics that reflect each of these variables, and we'll come to that shortly.
- Recurring revenue reflects your "true" income more accurately than gross sales or invoiced amounts. That's because recurring revenue demonstrates the value you earn from sales or invoices over time rather than the amount booked each month.
- Recurring revenue is a reliable metric for confidently forecasting the future value of a business or income stream. Consequently, it's essential for making investment decisions and quantifying the future value of a business.
Pro Tip: To learn more about why recurring revenue metrics are so critical for subscription-based businesses, I recommend this video:
The SaaS business model & metrics: Understand the key drivers for success (youtube.com)
What's The Difference Between MRR and ARR?
MRR is a month-by-month measure of recurring revenue that you track over time, whereas ARR (Annual Recurring Revenue) is the annualized equivalent. Usually, you calculate ARR by multiplying MRR by twelve.
For example, if you sell a three-year maintenance contract for $36,000, your monthly recurring revenue (MRR) is $1000, whereas your annual recurring revenue (ARR) is $12,000.
Nevertheless, you might be wondering:
Which is more critical, MRR or ARR?
The two metrics provide slightly different perspectives on the critical dynamic of recurring revenue. As such, I recommend you use each one for a different purpose.
On the one hand, if long-term investment decision-making is your goal, or you want to value your company or revenue stream, ARR is your preferred tool. In contrast, for month-to-month sales and marketing management or deciding upon how to optimize operational resources across various departments, MRR is your metric.
In other words, for everyday purposes, I recommend you use MRR. That's because multiple additional recurring revenue metrics are more straightforward to calculate and have more meaning at the monthly rather than annual level. I'm thinking, for example, Net New MRR, MRR Growth percentage, and Cancellation MRR.
We'll come to those additional metrics shortly.
But first:
How To Increase Recurring Revenue?
We can define revenue changes as coming from two places: Growth Drivers and Revenue Leakage. Growth requires strong sales execution. Retention requires customer success and product adoption.
The Growth Drivers are:
- Sales to new customers
- Upgrades
- Expansion to new products
- Reactivations.
Revenue Leakage comes from:
- Downgrades
- Cancellations
- Churn.
The growth drivers that increase MRR and ARR are:
- Sales to new customers. Every time you sell a product to a first-time customer, your MRR increases.
- Upgrades. Your MRR increases when existing customers spend more on a product they already have. This may be due to an increase in either price or quantity, or both.
- Expansion to new products. When an existing customer buys another product, your recurring revenue takes a positive upturn.
- Reactivations. Recurring revenue increases when a customer restarts a previously cancelled subscription.
The revenue leakage factors that diminish MRR and ARR are:
- Downgrades. Downgrades are the opposite of an upgrade. It happens when customers retain their subscriptions but spend less per month. The reduction can be due to a change in Quantity, a decrease in the unit price charged to the customer, or both.
- Cancellations. When customers cancel a contract, your MRR reduces.
- Churn. Churn happens when a customer cancels all their subscriptions with you. Cancellation and churn also significantly affect Customer Lifetime Value (CLV).
Often, SaaS businesses encapsulate their strategy for increasing recurring revenue as 'land and expand'. In other words, their approach is to establish an initial foothold in the customer organization, typically with a few users, and increase revenue by acquiring more users and selling additional products.
Conversely, as they grow, these companies also make increased efforts to retain recurring revenue by hiring customer success managers and taking other steps to minimize cancellations.
How To Track Recurring Revenue In Salesforce
Tracking recurring revenue metrics accurately in Salesforce is difficult using standard objects alone — especially once you introduce the suite of MRR types and multiple subscriptions per account.
The optimum way to calculate recurring revenue, including advanced MRR and ARR metrics in Salesforce, is the GSP Subscription Manager app.
The app creates the advanced MRR metrics you need to manage any subscription business effectively.
Let's take a look:
Types of MRR You Can Measure In Salesforce
The GSP Subscription Manager app calculates these types of MRR metrics:
- Pipeline.
- New.
- Upgrade.
- Expansion.
- Downgrade.
- Cancellation.
- Churn.
- Reactivation.
Here's what each of these values means.
Pipeline MRR
This metric calculates the potential recurring revenue associated with opportunities in the sales funnel.
The Weighted Pipeline MRR is calculated as the Pipeline MRR multiplied by the opportunity probability.
New MRR
New MRR is the increase in recurring revenue gained in a month from new customers.
This metric is different from Upgrade or Expansion MRR. That's because the MRR for other purchases by the same customer will have an MRR Type of Upgrade or Expansion (see below).
Upgrade MRR
When the customer increases their spending on an existing product linked to a Subscription, we count that as an Upgrade MRR.
For example, a new customer purchases ten licenses in January. We'll have a New MRR value in the first month because the customer has never bought anything from us. However, the customer buys five additional licenses for the same product in June. That means there's an increase in Upgrade MRR for June.
In other words, Upgrade is the uptick in revenue from customers that increase their payment on an existing Subscription. The increase in total payment may be due to a change in the Sales Price and/or Quantity (or a decrease in one and an increase in the other).
Expansion MRR
Expansion MRR occurs when an existing customer purchases a new product.
For example, the customer purchases ten licenses in January. In March, they buy a different product. That means in March, we'll have an increase in Expansion MRR because it relates to a new product purchase by an existing customer.
Downgrade MRR
Downgrade MRR is the opposite of Upgrade MRR. Downgrade MRR happens when the customer decreases their payment on an existing Subscription.
For example, in our previous scenario, if the customer reduces their licenses by three in October, we'll count that as a Downgrade MRR in that month.
Of course, the customer may reduce their quantity, but the price increases sufficiently to offset this. In that scenario, you might even have an Upgrade MRR that month.
Cancellation MRR
Cancellation MRR happens when a customer cancels a Subscription (see also Churn MRR below). In other words, the customer no longer uses the product or service, rather than downgrading its use.
Often, it's insightful to measure Cancellation MRR by $ amount and count (the number of subscriptions).
We differentiate between Cancellation MRR and Churn MRR in the GSP Subscription Manager app.
Churn MRR
Churn MRR happens when a customer cancels all Subscriptions linked to the Account. In other words, we've lost the customer entirely.
If the customer only had one product with us, cancelling the contract means we have Churn MRR. However, if the customer has purchased two products, both need cancelling to qualify as Churn MRR.
Reactivation
Sometimes, we get lucky. A customer that cancelled subsequently restarts their subscription. In the month of restart, we call this Reactivation MRR.
For example, the customer purchases ten licenses on an annual renewal agreement in January but decides against renewing the following year. Consequently, we have Cancellation or Churn MRR in December.
However, the customer then buys five licenses for the same product in March of the following year. As a result, we have Reactivation MRR in March, equivalent to the value of the five licenses.
Additional MRR Metrics In Salesforce
The GSP Subscription Manager app calculates and reports on all the metrics we've described.
However, it also delivers additional metrics important in communicating and assessing monthly recurring revenue. These include:
Uplift MRR
Uplift MRR is the sum of New, Expansion, Upgrade and Reactivation MRR. In other words, it's the increase in monthly recurring revenue before considering factors that reduce MRR.
Contraction MRR
Contraction MRR is the opposite of Uplift MRR. It's the sum of Churn, Cancellation, and Downgrade MRR. In other words, the decrease in monthly recurring revenue before considering factors that increase MRR.
Net Uplift
You can probably guess this one. Net Uplift is the difference between Uplift and Contraction MRR. It's the amount by which your monthly recurring revenue has changed in the month.
Net New MRR
Net New MRR is the sum of New, Expansion, and Reactivation MRR minus the sum of Cancellation and Churn MRR.
As such, it excludes Upgrade and Downgrade MRR. That's because Net New MRR represents the difference in recurring revenue attributed to new product sales versus lapsing customers. In other words, it ignores adjustments to existing products that customers retain.
MRR Growth
MRR Growth is the month-on-month percentage change in monthly recurring revenue. For example, if the total MRR last month was $100,000 and this month it's $110,000, the MRR Growth this month is 10%.
MRR Growth is an excellent scorecard for assessing the health of your business. As with the other metrics, you can report at the product, subscription, sales team, and company levels. Either way, in a successful business, you want a steady increase in month-on-month MRR Growth.
Pro Tip: To learn more about how SaaS businesses use these metrics, I recommend this video:
Commonly Asked Questions
Cancellation occurs when a customer cancels one subscription but retains others. Churn occurs when a customer cancels all their subscriptions. If a customer has only one active subscription and cancels it, we classify the MRR or ARR as churn because there are no remaining active subscriptions.
Tracking Recurring Revenue With The GSP Subscription Manager App
The GSP Subscription Manager app enables everything we've explained in this article.
It also does much more, including full support for renewal and evergreen products, volume pricing, product bundles, and subscription management.
Curious?
Here are two steps you can take today.
- Read: How To Manage Subscription Products in Salesforce. The article includes several short videos highlighting vital parts of the app.
- Get in touch for a walk-through of the app. Book a walkthrough to explore how you can bring your own MRR and ARR to life — including a free trial
Speak soon.
