Combine monthly and annual plans into annual recurring revenue, leave out one-off fees, and see where ARR is heading.
Part of our SaaS metrics guide: formulas, benchmarks and how each metric connects.
Setup fees, services and other one-time payments are shown for reference but never counted in ARR.
Annual recurring revenue
$71,760
MRR equivalent
$5,980
ARR in 12 months
$144,395
Annual recurring revenue (ARR) is the yearly value of all active subscriptions. It shows how much revenue your customers will bring in over the next year if nothing changes, which is why investors use it to compare SaaS companies.
ARR = (monthly plan revenue × 12) + annual plan revenue
With only monthly plans this is simply ARR = MRR × 12.
MRR tracks month-to-month movement: new, expansion, churn. ARR is the same revenue seen over a year and is the figure used for valuation multiples and annual plans.
| Revenue | In ARR? | How |
|---|---|---|
| Monthly subscriptions | Yes | Count each one as monthly price × 12. |
| Annual subscriptions | Yes | Count the yearly price once. |
| Multi-year contracts | Yes | Count only one year's value, not the whole contract. |
| Recurring add-ons and seats | Yes | Count them if they renew automatically. |
| Setup and onboarding fees | No | They are paid once. |
| Consulting and services | No | They are project revenue, not subscriptions. |
| Usage overages that vary | No | Leave them out unless a minimum is contracted. |
| Free trials and unpaid pilots | No | No customer is paying yet. |
Each metric feeds the next. See how they fit together in the SaaS metrics guide.
Monthly recurring revenue from customers, price, churn and expansion.
Customer churn and revenue churn for any period, plus the yearly cost.
Lifetime value from price, gross margin and churn, with LTV:CAC and payback.
Customer acquisition cost from marketing and sales spend per new customer.
A valuation range from ARR, growth rate and profitability.