MRR and ARR Calculator

Multiply current MRR by twelve. $20,580 of MRR is $246,960 of ARR. Do not sum the last twelve months of invoices — that is trailing revenue, and on a growing business it is always lower than ARR. Exclude setup fees, one-off services and usage overages, because none of them recur.

ARR = MRR × 12, and MRR = paying customers × average revenue per user. If you sell annual contracts, divide each contract by twelve to get its MRR contribution rather than booking the whole amount in the signing month. For mixed monthly and annual plans, normalise everything to a monthly figure first, then multiply once at the end.

The business collects $1,000 of subscription revenue every month, which is $12,000 of ARR. It is a milestone figure because it is roughly where a side project starts covering its own costs. What matters more than the level is the composition: $1,000 from one customer is a different business from $1,000 spread across fifty.

There is no absolute number — growth rate and net revenue retention decide whether an MRR figure is good. $20,000 of MRR growing 8% a month with expansion covering churn is a strong business; the same $20,000 flat, with churn eating every new signup, is not. Track net new MRR monthly rather than the total, because the total only ever looks reassuring.

Monthly recurring revenue: the predictable subscription revenue a business bills every month. The word doing the work is recurring, which is why one-off charges, hardware sales and consulting hours are excluded no matter how regular they feel. ARR is the same figure annualised.

For growth, doubling ARR year on year is the usual early-stage expectation, easing towards 40-50% at larger revenue. Judge it alongside net revenue retention: above 100% means existing customers alone grow ARR, and every new customer is pure upside. Below 90% and you are refilling a leaking bucket.