ARR Calculator – Guide & Formulas
Calculate Annual Recurring Revenue (ARR) for subscription businesses. Measure annual revenue growth.
Try the free calculator
Put these formulas into practice with our instant, step-by-step ARR Calculator.
The ARR Calculator determines your Annual Recurring Revenue, the total predictable revenue from subscriptions over a year. ARR is the standard metric used by investors and analysts to value subscription businesses.
Key Takeaway
Use the free ARR Calculator to calculate annual recurring revenue (arr) for subscription businesses. measure annual revenue growth. Get instant results with step-by-step explanations.
How to Use the ARR Calculator
- Enter your current MRR (Monthly Recurring Revenue).
- Or input all subscription plans and customer counts.
- The calculator computes your ARR.
- Use for valuation and growth projections.
The Formula
Variable Definitions
- ARR: Annual Recurring Revenue — total predictable annual subscription revenue
- MRR: Monthly Recurring Revenue
Calculating ARR from MRR
A SaaS company has $50,000 in MRR.
- Step 1: MRR = $50,000.
- Step 2: ARR = $50,000 × 12.
- Step 3: ARR = $600,000.
- Step 4: The company generates $600,000 in annual recurring revenue.
Frequently Asked Questions
What is ARR?
ARR (Annual Recurring Revenue) is the total predictable revenue generated from subscriptions over a 12-month period. It is calculated as MRR × 12.
How do investors use ARR?
Investors use ARR to determine company valuation, typically applying a multiple based on growth rate. Higher ARR growth rates command higher valuation multiples.
What is net new ARR?
Net new ARR is the change in ARR from one period to the next, accounting for new customer revenue, expansion revenue, contraction, and churn.