What is Ghost MRR?
Ghost MRR is the recurring revenue a SaaS business gives away by offering discounts to trial users who would have converted at full price anyway — the invisible margin destroyed by untargeted, blanket discounting.
How to calculate Ghost MRR
Ghost MRR isolates the discounts that were unnecessary — the ones given to trials who would have paid full price anyway. The formula:
Ghost MRR = Σ ( P(would_pay_full_price) × discount_amount )summed over every discounted conversion in the period.
The hard part is the first term — the counterfactual probability a user would have converted without the discount. Estimating it requires modelling each trial's behavior rather than reading a spreadsheet, which is why the metric only became practical with per-user conversion prediction.
Why Ghost MRR isn't churn or discount spend
Churn counts revenue you lost. Gross discount cost counts every discount you handed out. Ghost MRR is the narrow, actionable slice in between: the discounts that changed nothing because the customer was always going to pay. It's the one number you can drive to zero without losing a single conversion — you simply stop discounting the people who don't need it.
Ghost MRR — frequently asked
How do you calculate Ghost MRR?+
For each discounted conversion, estimate the counterfactual probability the user would have paid full price without the discount. Multiply that probability by the discount amount, then sum across all discounted conversions in the period. The total is your Ghost MRR — the full-price margin your discounting gave away.
Why isn't Ghost MRR just churn or discount cost?+
Churn measures users you lost; discount cost measures every discount you gave. Ghost MRR is narrower and more actionable: it isolates only the discounts that were unnecessary because the user would have paid anyway. That's the specific waste you can eliminate without losing conversions.
Who coined the term Ghost MRR?+
The metric was introduced by KaQuill as a first-class way to measure the margin lost to blanket trial discounting, distinct from churn and gross discount spend.
How do I reduce Ghost MRR?+
Stop discounting trials indiscriminately. Predict which trials will convert at full price and withhold discounts from them, reserving interventions for genuine fence-sitters. Modelling conversion probability per trial is what turns Ghost MRR from an abstract loss into a number you can shrink.
Is Ghost MRR a standard SaaS metric?+
It's an emerging one. Traditional SaaS reporting tracks MRR, churn, and CAC but has no line item for revenue lost to unnecessary discounting. Ghost MRR fills that gap, and tools like KaQuill compute it automatically from behavioral data.