ARR Calculator
Calculate your Annual Recurring Revenue (ARR) to measure SaaS subscription revenue performance.
Total monthly recurring revenue from subscriptions
Revenue from annual subscription payments (optional)
Non-recurring revenue to exclude (optional)
What is Annual Recurring Revenue (ARR)?
ARR is the value of recurring revenue normalized to a one-year period. Formula: ARR = MRR * 12 + Annual Subscriptions. It measures the yearly revenue your SaaS business can expect from subscriptions. ARR only includes recurring revenue from subscriptions, excluding one-time fees, professional services, or variable usage charges. It's a key metric for subscription businesses to track predictable revenue.
What is the difference between ARR and MRR?
MRR (Monthly Recurring Revenue) is the monthly value of all active subscriptions. ARR is the annualized version. ARR = MRR * 12 for monthly subscriptions. Example: $50,000 MRR = $600,000 ARR. Use MRR for short-term tracking and cash flow. Use ARR for long-term planning, valuations, and comparing with annual contracts. Both exclude one-time payments.
What should be included in ARR calculation?
INCLUDE: Monthly subscription fees (*12), annual subscription fees, recurring add-ons and upgrades. EXCLUDE: One-time setup fees, professional services, consulting revenue, usage-based overages (unless contracted minimum), hardware sales, training fees. Only count guaranteed, recurring revenue that will repeat annually. Discounts and credits should reduce ARR.
What is a good ARR for a SaaS company?
Good ARR depends on stage: Pre-seed: $0-100K (proving concept), Seed: $100K-1M (product-market fit), Series A: $1M-3M (scaling), Series B: $5M-15M (growth), Series C+: $20M+ (established). More important than absolute ARR: Growth rate (100%+ early stage, 40%+ later stage), ARR per employee ($100K-200K), and customer retention (90%+ net revenue retention).
How is ARR used in SaaS valuations?
ARR is the primary metric for SaaS valuations. Valuation = ARR * Multiple. Multiples vary by growth rate and market: High-growth (100%+): 15-30* ARR, Medium-growth (40-100%): 8-15* ARR, Slower-growth (<40%): 3-8* ARR. Example: $2M ARR growing 80%/year might be valued at $24M-30M (12-15* ARR). Investors focus on ARR growth rate, churn, gross margins, and CAC payback period.
How do you calculate ARR growth rate?
ARR Growth Rate = (Current ARR - Previous ARR) / Previous ARR * 100. Example: Grew from $1M to $1.5M ARR = ($1.5M - $1M) / $1M * 100 = 50% growth. Track monthly, quarterly, and annually. Also measure: New ARR (from new customers), Expansion ARR (upgrades), Churned ARR (lost customers), Net New ARR (additions minus churn). Aim for 100%+ growth early stage, 40%+ at scale.