A subscription is a business model where customers pay a recurring fee to access a product or service, typically billed monthly or annually. This creates predictable revenue streams that require specific measurement approaches.

Monthly recurring revenue (MRR) forms the basic building block of subscription analytics, representing the normalized monthly revenue from all active subscriptions. MRR calculation combines revenue from different subscription tiers and billing periods into a single, comparable monthly value. Annual recurring revenue (ARR) provides a yearly view by multiplying MRR by 12, offering a longer-term perspective on business performance.

Understanding subscriber behavior across different pricing tiers is crucial for accurate subscription analytics. While total subscriber count might increase, MRR can fluctuate based on the distribution of users across pricing plans and their chosen billing periods. This makes it essential to track both user counts and their associated revenue contributions separately.