Annual Recurring Revenue (ARR) Calculator
Calculate ARR from your MRR, contract values, and subscriber counts. Project ARR at different growth rates to model your SaaS trajectory.
📊 SaaS💼 ARR = MRR × 12 (or sum of annual contract values)
Current MRR ($)
Monthly growth rate (%)
Projection horizon (months)
Please enter valid values.
Formula & Reference
| Variable | Formula | Units |
|---|---|---|
| Annual Recurring Revenue (ARR) Calculator | ARR = MRR × 12 (or sum of annual contract values) | $/year |
Step-by-Step Examples
Example 1
$25k MRR SaaS
$25k MRR, 5% monthly growth, 12 months.
- Current ARR: $300,000
- In 12 months: MRR $25k×(1.05)^12 = $44,833
- Projected ARR: $537,996 (+79%)
✓ ARR grows $300k → $538k in 12 months
Example 2
$100k MRR Scale
$100k MRR, 3% monthly growth, 24 months.
- Current ARR: $1.2M
- In 24 months: MRR = $100k×(1.03)^24 = $202,937
- ARR: $2.43M (doubled in 2 years)
✓ ARR doubles to $2.43M in 24 months
Example 3
Slow Growth
$50k MRR, 1% monthly growth, 12 months.
- Current ARR: $600,000
- Projected ARR: $600k×1.127 = $676k
- Low growth signals need for new growth channels
✓ Modest ARR growth to $676k
Real-World Applications
Investor Reporting
ARR is the standard SaaS valuation metric. Track it quarterly for fundraising readiness.
Valuation
SaaS multiples are applied to ARR: early stage 5–10x, growth stage 10–20x ARR.
Planning
Project ARR to align headcount, infrastructure, and sales targets.
M&A
Acquisition conversations start with ARR as the primary value anchor.
Common Mistakes to Avoid
⚠️
Using total contract value instead of ARR
ARR = annualized recurring revenue. A 3-year $360k contract is $120k ARR, not $360k.
⚠️
Including one-time revenue in ARR
Professional services, setup fees, and one-time payments are not recurring. Keep them separate from ARR.
⚠️
Not adjusting for churn in forward projections
Projecting ARR at your new MRR growth rate without subtracting churn overestimates future ARR significantly.
Frequently Asked Questions
What is a good ARR growth rate for SaaS? ▾
Rule of thumb: T2D3 — Triple, Triple, Double, Double, Double. Less than 50% annual growth at under $1M ARR is concerning; T3 ($0–$1M to $3M) is excellent.
What ARR multiples are typical in SaaS M&A? ▾
Revenue multiples vary by growth rate and gross margin. 5–10x for slower-growing SaaS, 10–20x for high-growth with strong retention, 20–50x for exceptional metrics.
What is NTM ARR? ▾
Next Twelve Months ARR — the projected ARR for the next 12 months. Used in forward-looking valuation, especially in fundraising.
How does ARR differ from revenue? ▾
ARR is the annualized value of recurring subscriptions. Revenue in GAAP accounting is recognized monthly as earned. They differ for multi-year contracts and deferred revenue.
When should I switch from MRR to ARR? ▾
Both metrics are always relevant. MRR for operational management; ARR for strategic planning and fundraising narratives above $1M ARR.