SaaS Metric

ARR & MRR Calculator

Calculate and track Annual Recurring Revenue (ARR) and Monthly Recurring Revenue (MRR). The most important metrics for SaaS businesses.

What are ARR and MRR?

Annual Recurring Revenue (ARR)

ARR is the value of recurring revenue normalized to a one-year period. It's the #1 metric VCs use to value SaaS companies.

ARR = MRR × 12

Monthly Recurring Revenue (MRR)

MRR is the predictable revenue you can expect every month from subscriptions. Essential for cash flow and operational planning.

MRR = Σ(Customer Subscriptions)

How to Calculate MRR

Identify Recurring Revenue

Only count subscription revenue. Exclude one-time fees, professional services, usage overage.

✓ Include: Monthly/annual subscriptions, add-ons, recurring support

✗ Exclude: Setup fees, consulting, variable usage charges

Normalize to Monthly

Convert all contracts to monthly equivalent:

Monthly plan $100/mo → $100 MRR

Annual plan $1,200/yr → $100 MRR ($1,200 ÷ 12)

Quarterly plan $300/qtr → $100 MRR ($300 ÷ 3)

Sum All Subscriptions

Add up normalized monthly values for all active customers:

MRR = Customer₁ + Customer₂ + ... + Customerₙ

Example: 50 customers × $200/mo = $10,000 MRR

MRR Movement Components

➕ Positive MRR

New MRR

Revenue from new customers acquired this month

Expansion MRR

Additional revenue from existing customers (upgrades, add-ons)

Reactivation MRR

Revenue from previously churned customers returning

➖ Negative MRR

Churned MRR

Lost revenue from cancelled subscriptions

Contraction MRR

Revenue decrease from downgrades or seat reductions

Net New MRR Formula

Net New MRR = New + Expansion + Reactivation - Churned - Contraction

ARR Benchmarks by Stage

Seed Stage

$0-$1M

Finding PMF

Series A

$1-$10M

Scaling GTM

Series B

$10-$30M

Market expansion

Series C+

$30M+

Path to IPO

Why ARR/MRR Matter

Valuation Driver

SaaS companies are valued as multiples of ARR. Higher ARR = higher valuation.

Growth Tracking

MRR enables precise month-over-month growth monitoring and forecasting.

Business Health

MRR movement reveals customer satisfaction, pricing effectiveness, and churn.

Frequently Asked Questions

What is ARR and how do I calculate it?

ARR (Annual Recurring Revenue) is your normalized annual subscription revenue. Calculate: ARR = MRR × 12, or sum all annual contract values. Only include recurring revenue - exclude one-time fees, services, or usage-based charges. ARR is the gold standard metric for SaaS valuation.

What is MRR and how is it different from ARR?

MRR (Monthly Recurring Revenue) is your predictable monthly subscription revenue. MRR = Number of Customers × Average Subscription Price. ARR = MRR × 12. Use MRR for monthly tracking and operational metrics. Use ARR for valuation discussions and annual planning.

Should I include annual contracts in MRR?

Yes, but normalize them monthly. If a customer pays $12,000/year, add $1,000 to MRR ($12,000 ÷ 12). This provides consistent month-over-month tracking. For ARR, count the full $12,000 annual value.

What is a good ARR growth rate for SaaS?

Good ARR growth by stage: Seed: 100-300% YoY, Series A: 100-200%, Series B: 70-150%, Series C+: 50-100%. Triple-triple-double-double-double (T2D3) path: 3x, 3x, 2x, 2x, 2x over 5 years to reach $100M ARR. Only ~1% of SaaS achieve this.

How do I track Net New MRR?

Net New MRR = New MRR + Expansion MRR - Churned MRR - Contraction MRR. Track each component separately: New MRR (new customers), Expansion (upgrades/upsells), Churned (cancelled customers), Contraction (downgrades). Positive Net New MRR = growth.

Learn More

→ SaaS Metrics Every Founder Must Track → How ARR Affects Your Valuation → SaaS Metrics FAQ

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