In plain English
MRR puts recurring subscription revenue on a monthly basis, even when customers pay on a different schedule. An annual subscription contributes one-twelfth of its recurring price each month. MRR excludes one-time fees and is different from the cash collected that month.
Example
An AI startup has 100 customers paying $20 per month and 10 paying $240 per year. Its MRR is $2,200 ($2,000 plus $200). A separate $500 setup fee does not add to MRR.