ARR Calculator
Calculate your SaaS Annual Recurring Revenue (ARR), monthly equivalent MRR, and average annual contract values across multi-year subscriptions.
Annual Recurring Revenue (ARR)
How to Calculate Annual Recurring Revenue
Annual Recurring Revenue (ARR) measures the normalized annual recurring earnings generated by subscription contracts. ARR is the primary top-line metric used to evaluate mid-market and enterprise B2B software companies.
This calculator supports two primary calculation methods:
- From Current MRR: Multiplies active monthly recurring revenue by 12 to project full-year run rate.
- From Total Contract Value (TCV): Normalizes multi-year enterprise agreements down to annual contract value by dividing total contract dollars by contract length in months and multiplying by 12.
The ARR Formulas
When calculating ARR from monthly recurring subscription revenue:
ARR = MRR x 12
For example, if your company generates $25,000 in monthly recurring revenue: $25,000 x 12 = $300,000.00 ARR.
ARR Formula for Multi-Year Contracts
When computing ARR from enterprise contracts with custom durations:
ARR = (Total Contract Value / Contract Term in Months) x 12
For example, a 3-year contract worth $120,000 (36 months) yields: ($120,000 / 36) x 12 = $3,333.33 x 12 = $40,000.00 ARR.
ARR Milestones Across B2B SaaS Tiers
The reference table below illustrates annual contract value and ARR metrics across common B2B software tiers.
| Customer Tier | Active Customers | Average ACV | Total ARR | Monthly MRR Equivalent |
|---|---|---|---|---|
| Pro Self-Serve | 200 | $1,200.00 ($100/mo) | $240,000.00 | $20,000.00 |
| Mid-Market B2B | 50 | $6,000.00 ($500/mo) | $300,000.00 | $25,000.00 |
| Enterprise SaaS | 25 | $40,000.00 | $1,000,000.00 ($1.00M ARR) | $83,333.33 |
Frequently Asked Questions
What is the difference between ARR and Annual Revenue?
Annual Revenue includes non-recurring income such as professional services, variable consulting fees, and hardware setup charges. ARR isolates strictly contractual, repeating subscription revenue.
What is the difference between ARR and ACV?
ARR measures total annual recurring revenue across your entire customer base. Annual Contract Value (ACV) measures the average annual recurring revenue generated per individual customer contract.
When should a company transition from tracking MRR to ARR?
Software companies typically track MRR during self-serve SMB stages. Once enterprise contracts and multi-year annual commitments account for significant revenue, management transitions to reporting ARR.
