Define recurring revenue
Document which contracts, discounts, and usage commitments qualify.
ARR Calculator
Convert monthly recurring revenue and direct annual contracts into a clear annual recurring revenue estimate.
Free SaaS metric calculator
Calculate your ARR
Do not include one-time implementation or service revenue.
Understand annual recurring revenue
Annual recurring revenue, commonly called ARR, represents the annualized value of predictable subscription contracts. It is especially useful for SaaS companies with annual plans or businesses that want a high-level view of recurring scale.
ARR is a run-rate metric, not necessarily the same as revenue recognized under accounting rules. It assumes the current recurring revenue base continues for a full year. Keep one-time fees, usage spikes without commitments, consulting, and hardware outside the calculation.
ARR formula
Normalized MRR × 12 + recurring annual contract value not included in MRRUse ARR as a consistent growth signal
ARR becomes more useful when its definition is stable and its movements are reconciled every reporting period.
Normalize the period
Convert every qualifying subscription into a twelve-month value.
Track ARR movement
Separate new ARR, expansion, contraction, and churn to explain growth.
ARR calculator FAQ
Is ARR the same as annual revenue?
No. ARR is an annualized recurring run rate; annual revenue includes recurring and non-recurring revenue actually recognized during the year.
Should usage-based revenue count in ARR?
Include only the predictable or contracted recurring portion. Volatile, uncommitted usage is better reported separately.
When should a startup use ARR instead of MRR?
ARR is useful for annual planning and higher-level reporting, while MRR provides more sensitivity to month-to-month changes.