ARR (Annual Recurring Revenue)

ARR (Annual Recurring Revenue) is the predictable subscription revenue your business earns across a year. For most companies it's simply MRR × 12, expressing the same recurring base as an annual figure.

How to calculate ARR

Multiply your current MRR by 12, or add up the annualized value of every active subscription.

If your MRR is $2,800, your ARR is $33,600.

Why teams use ARR instead of MRR

• Contracts — businesses selling annual plans think in yearly terms, so ARR matches how deals are signed.
• Valuation — investors commonly value SaaS companies on a multiple of ARR.
• Scale — at larger revenue, an annual number is easier to reason about than a monthly one.

Smaller and month-to-month businesses usually track MRR day to day and quote ARR when talking to investors.