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ARR Calculator
Build an MRR bridge and calculate annual recurring revenue.
RECURRING REVENUE RUN RATE
Calculate ARR from your MRR bridge
ARR is an annualized run-rate metric, not revenue already earned or a GAAP revenue forecast. Currency selection changes formatting, not values.
THE BASICS
What is an ARR calculator?
An annual recurring revenue calculator turns your current recurring monthly revenue into an annual run rate. This version also builds an MRR bridge so you can see whether new sales and expansion are outrunning downgrades and churn.
If your subscriptions use mixed billing periods, normalize them first with the MRR Calculator, then use the resulting monthly recurring revenue here.
ARR and MRR formulas
Net new MRR = new MRR + expansion MRR − contraction MRR − churned MRREnding MRR = starting MRR + net new MRRARR = ending MRR × 12The annualized change is net new MRR multiplied by 12. Monthly MRR growth compares net new MRR with starting MRR; it is unavailable when starting MRR is zero because there is no meaningful baseline.
ARR calculation example
Starting with $10,000.00 MRR, the default bridge adds new and expansion revenue, then subtracts contraction and churn. Ending MRR is $11,500.00, producing $138,000.00 ARR.
| Result | Amount |
|---|---|
| Starting MRR | $10,000.00 |
| New MRR | $2,000.00 |
| Expansion MRR | $1,000.00 |
| Contraction MRR | −$500.00 |
| Churned MRR | −$1,000.00 |
| Ending MRR | $11,500.00 |
| ARR | $138,000.00 |
What to include in ARR
Include predictable subscription revenue that is active at the measurement date. Exclude implementation fees, consulting, hardware, taxes, one-time purchases, and usage revenue without a recurring commitment.
ARR says nothing by itself about retention, margins, or acquisition efficiency. Pair the bridge with the Churn Calculator, the CAC Calculator, and the SaaS Pricing Calculator.
COMMON QUESTIONS
ARR questions
What is annual recurring revenue (ARR)?
ARR is the annualized value of recurring subscription revenue at a point in time. It converts the current monthly recurring revenue run rate into a 12-month equivalent.
What is the difference between ARR and annual revenue?
ARR is a forward-looking run-rate metric based on recurring revenue. Annual revenue is the revenue actually recognized or collected during a year and may include one-time, services, usage, or other non-recurring revenue.
Should annual contracts be added directly to ARR?
Normalize every recurring contract to MRR first, then multiply total ending MRR by 12. Do not add a contract's full annual value again if its monthly equivalent is already included in MRR.
Can ARR decrease?
Yes. If contraction and churned MRR exceed new and expansion MRR, net new MRR is negative, ending MRR falls, and ARR decreases.
Is ARR useful for very early SaaS companies?
It can be useful as a consistent run-rate snapshot, but a small customer base makes it volatile. Review the MRR bridge and customer concentration alongside the headline ARR number.