ARR, annual recurring revenue, is the yearly value of the subscription revenue a company is running at today. It is MRR × 12 and leaves out one-time fees, services and usage that changes month to month.

MRR, monthly recurring revenue, is the subscription revenue you can expect every month. Monthly plans count their price; annual plans count their yearly price divided by 12.

How do you convert MRR to ARR?

Multiply MRR by 12. $25,000 of MRR is $300,000 of ARR. To go back, divide ARR by 12.

Do annual plans count in MRR?

Yes, divided by 12. A customer who pays $1,200 a year adds $100 of MRR every month of the contract, not $1,200 in the month they pay.

Is ARR the same as revenue?

No. Revenue includes one-time fees, services and usage. ARR counts only recurring subscription revenue, annualised. A company can book more revenue than its ARR in a year with big setup fees, or less in a year when it grew fast late on.

Average revenue per user (or per account, ARPA): MRR divided by paying customers. It tells you whether growth comes from more customers or from customers paying more.

Annual contract value: what one contract is worth per year. For a single customer it equals their ARR; averaged across customers it is ARR divided by the number of contracts.

A growth path for venture-backed SaaS described by Neeraj Agrawal of Battery Ventures: triple ARR for two years, then double it for three. It is a benchmark for fast-growing companies, not a rule every business should follow.

Free calculator

ARR & MRR calculator with ARPU and growth

Turn MRR into annual recurring revenue, count annual plans correctly, and see your ARPU, your ARR bridge and the months left to your next milestone.

Updated October 27, 2026

Your numbers

MRR

Recurring revenue for one month. Leave out one-time fees.

Paying customers

Optional. Used for ARPU.

MRR growth per month

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ARR

$192,000

$16,000 of MRR × 12.

ARPU per month: $80.00
ARPU per year: $960
ARR in 12 months: $483,489
Months to $1M ARR: in 22 months

Milestones at this growth

$100KReached
$1Min 22 months
$10Min 52 months

ARR over the next 24 months

$1.2M

TodayMonth 6Month 12Month 18Month 24

At 8% monthly growth you reach $1M ARR in 22 months.

Quick answer

How do you calculate ARR?

ARR = MRR × 12, where MRR is one month of recurring revenue with annual plans divided by 12 and one-time fees left out. $16,000 of MRR is $192,000 of ARR. To see how ARR moves over a period, use the ARR bridge: starting ARR + new + expansion − contraction − churned = ending ARR.

How to use the ARR calculator

Pick a mode
MRR to ARR for a quick conversion and milestones, Plan mix when you sell monthly and annual plans, ARR bridge to see how ARR moved over a month or a quarter.
Enter your numbers
Use recurring revenue only. Annual plans go in at their yearly price; the calculator divides them by 12.
Read the result
See ARR, MRR and ARPU, or the bridge with net new ARR, quick ratio and retention.
Share it
Copy the link to send the exact numbers to a cofounder or investor. Nothing is stored on our side.

How the calculator works

MRR is the recurring revenue you can expect every month. A monthly plan adds its price; an annual plan adds its yearly price divided by 12, because one annual payment covers twelve months of service. Setup fees, services and one-off purchases are revenue, but not recurring revenue, so they never enter MRR or ARR.

ARR is MRR × 12. It is a snapshot of the recurring revenue you are running at today, not a forecast. The milestone projection compounds today’s ARR by the monthly growth rate you set, and stops at 20 years.

The ARR bridge explains a change in ARR. The quick ratio is new plus expansion ARR divided by contraction plus churned ARR. Net revenue retention is what the starting customers pay at the end of the period, expansion included; gross revenue retention leaves expansion out.

Formula

ARR = MRR × 12
MRR = Σ monthly plan prices + Σ (annual plan price ÷ 12)
Ending ARR = starting ARR + new + expansion − contraction − churned

Worked example

100 customers on a $50 monthly plan: 100 × $50 = $5,000 MRR.
40 customers on a $480 annual plan: 40 × $480 ÷ 12 = $1,600 MRR.
Total MRR: $5,000 + $1,600 = $6,600.
ARR: $6,600 × 12 = $79,200.
ARPU: $6,600 ÷ 140 customers = $47.14 a month.

What counts in ARR, and what does not

Revenue	In ARR?	Why
Monthly subscriptions	Yes	Recurring every month.
Annual and multi-year plans	Yes, per year	Count one year’s value: a 3-year $36,000 contract adds $12,000 of ARR.
Committed usage minimums	Yes	The customer pays the minimum whatever they use.
Usage above the minimum	Usually no	It moves month to month. Report it separately or as a trailing average, and say which.
Setup and onboarding fees	No	Paid once.
Services and consulting	No	Project revenue, not subscription revenue.
Lifetime deals	No	Paid once, even though the customer keeps access.
Free trials	No	Nothing is paid yet.
Discounts	Net of discount	Count what the customer actually pays.

ARR vs MRR: which one to report

Report MRR while most customers pay monthly and the numbers move fast; it shows month-to-month progress. Switch to ARR once annual contracts dominate or you sell to larger companies, where deals are priced per year. Investors read both, and the two must agree: ARR is always MRR × 12, never last year’s billings.

ARR vs revenue run rate

Run rate annualises total revenue, recurring or not: one month’s revenue × 12. ARR annualises recurring revenue only. A month with a large setup fee inflates run rate but leaves ARR unchanged, which is why investors in subscription businesses ask for ARR.

How to grow ARR faster

ARR grows from three places: new customers, expansion from existing ones, and fewer cancellations. Expansion and retention compound, because a customer who upgrades this year starts next year bigger. For new customers, the cheapest channels for an early product are the ones with no media spend: launch platforms, directory listings and content that ranks.

ARR questions

What is ARR?: ARR, annual recurring revenue, is the yearly value of the subscription revenue a company is running at today. It is MRR × 12 and leaves out one-time fees, services and usage that changes month to month.
What is MRR?: MRR, monthly recurring revenue, is the subscription revenue you can expect every month. Monthly plans count their price; annual plans count their yearly price divided by 12.
How do you convert MRR to ARR?: Multiply MRR by 12. $25,000 of MRR is $300,000 of ARR. To go back, divide ARR by 12.
Do annual plans count in MRR?: Yes, divided by 12. A customer who pays $1,200 a year adds $100 of MRR every month of the contract, not $1,200 in the month they pay.
Is ARR the same as revenue?: No. Revenue includes one-time fees, services and usage. ARR counts only recurring subscription revenue, annualised. A company can book more revenue than its ARR in a year with big setup fees, or less in a year when it grew fast late on.
What is ARPU?: Average revenue per user (or per account, ARPA): MRR divided by paying customers. It tells you whether growth comes from more customers or from customers paying more.
What is ACV?: Annual contract value: what one contract is worth per year. For a single customer it equals their ARR; averaged across customers it is ARR divided by the number of contracts.
What is T2D3?: A growth path for venture-backed SaaS described by Neeraj Agrawal of Battery Ventures: triple ARR for two years, then double it for three. It is a benchmark for fast-growing companies, not a rule every business should follow.

Cite this tool

Free to link and quote. Use this reference:

SaaSCity, "ARR & MRR Calculator", October 27, 2026. https://saascity.io/free-tools/arr-calculator