ARR Calculator
Annual Recurring Revenue (ARR) is the annualized value of your recurring subscription revenue. It provides a standardized way to measure and compare SaaS business size and is the primary metric used in company valuations. ARR excludes one-time fees and variable revenue.
How to Calculate
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ARR = MRR × 12
ARR Components:
New ARR: From new customers- Expansion ARR: Upsells and upgrades
- Churned ARR: Lost subscriptions
- Net New ARR: New + Expansion - Churned
Industry Benchmarks
| ARR Range | Company Stage | Typical Valuation Multiple |
|---|---|---|
| $0-1M | Seed | 5-10x ARR |
| $1-5M | Series A | 8-15x ARR |
| $5-20M | Series B | 10-20x ARR |
| $20M+ | Growth | 15-30x ARR |
Interpreting Your Results
ARR growth rate is a key indicator of company health. Top quartile SaaS companies grow ARR by 100%+ annually at early stages, slowing to 30-50% at scale. Track ARR composition to understand growth drivers.
Why This Metric Matters
Understanding ARR helps you:
- Make data-driven business decisions with confidence
- Benchmark against industry standards and competitors
- Identify areas for improvement in your business model
- Communicate performance clearly to stakeholders and investors
- Set realistic goals and track progress over time
Best Practices for Accurate Measurement
1. Use consistent time periods: Compare month-over-month or quarter-over-quarter consistently 2. Include all relevant data: Ensure you capture all revenue sources and costs 3. Track cohorts separately: Analyze metrics by customer segment and acquisition date 4. Monitor trends: Single snapshots are less valuable than trends over time 5. Automate tracking: Use analytics tools to ensure consistent, accurate measurement
Every Metric From These Inputs
100 customers at $49 with 3% monthly churn and $200 CAC:
| Metric | Value | Formula |
|---|---|---|
| MRR | $4,900 | customers × ARPU |
| ARR | $58,800 | MRR × 12 |
| Annual churn | 30.6% | 1 − (1 − monthly)¹² |
| Average lifetime | 33.3 months | 1 ÷ monthly churn |
| LTV | $1,633 | ARPU ÷ monthly churn |
| LTV : CAC | 8.2:1 | LTV ÷ CAC |
| CAC payback | 4.1 months | CAC ÷ ARPU |
What Good Looks Like
| Metric | Healthy | Concerning |
|---|---|---|
| Monthly churn (SMB) | Under 3% | Above 5% |
| Monthly churn (enterprise) | Under 1% | Above 2% |
| LTV : CAC | 3:1 or better | Below 1:1 |
| CAC payback | Under 12 months | Above 18 |
| Net revenue retention | Above 100% | Below 90% |
The Metric This Set Omits
Net revenue retention — expansion revenue minus churn and contraction, from existing customers only. Above 100% means the business grows without acquiring anyone, which is the single strongest signal in SaaS and the one that most affects valuation. It cannot be derived from the inputs above because it needs upgrade and downgrade data.