MRR / ARR calculator

MRR (Monthly Recurring Revenue) is the recurring revenue your active subscriptions generate, on a monthly basis. ARR (Annual Recurring Revenue) is simply that same revenue annualized: ARR = MRR × 12. These aren't two different metrics — the same number, viewed at two different time scales.

Why both exist: MRR is the day-to-day steering metric — it's what moves every month with new customers, upgrades, and cancellations. ARR mostly serves as a common language with the outside world: investors, industry benchmarks, comparisons between companies. A SaaS announcing "$1M in ARR" communicates in one phrase what would otherwise need to be expressed as monthly MRR — less intuitive for someone used to annual cycles.

A common point of confusion: an annually-billed subscription shouldn't be counted all at once in the MRR of the month it's paid. A customer paying $1,200 for a year contributes $100 of MRR every month of their subscription, not $1,200 in the billing month — otherwise a given month's MRR would depend entirely on the luck of annual renewal dates.

The "calculate MRR from your customers" block above is useful for a quick estimate: customer count × monthly ARPU. It's a shortcut, not an exact calculation — it assumes a uniform ARPU, when in reality your customers are spread across several plans at different prices. For an exact figure, sum active subscriptions directly rather than multiplying by an average.

Common mistake: using ARR to calculate monthly growth — monthly change should always be read off MRR, since ARR is just an annualized snapshot at a single point in time. Another mistake: comparing an ARR calculated from last month's MRR to one calculated from a 12-month average — the two methods give different numbers, and mixing them in the same communication creates confusion that's easy to avoid by always stating the method.