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ARR Calculator
TL;DR
Annual recurring revenue (ARR) = MRR × 12. It is a run-rate projection of subscription revenue, not a trailing twelve-month sum. To model where ARR will be in 12 months, compound the net monthly MRR growth rate (expansion rate − churn rate) forward: projected MRR = current MRR × (1 + net rate)^12, then multiply by 12. Even a 1% difference in monthly net growth rate produces dramatically different ARR trajectories over a year because of compounding.
Expansion includes upgrades and seat additions. Churn is lost MRR from cancellations and downgrades. Net MRR growth = expansion − churn, compounded monthly over 12 months for the projected ARR.
Current ARR
$600,000
Current MRR × 12 — assumes today's run-rate holds.
Net MRR growth / month
$500
Net rate: +1.0% per month (expansion 3.0% − churn 2.0%).
Projected ARR in 12 months
$676,095
+$76,095 vs. today (+12.7%).
See also: ARR definition · MRR calculator · NRR calculator
How to calculate ARR
ARR = MRR × 12. This assumes today's run-rate continues unchanged. For annual-contract businesses, ARR can also be summed directly from contract values, which avoids the ×12 approximation for customers whose billing cycle is already annual.
Modeling ARR trajectory
A more useful ARR question is: where will ARR be in 12 months? To answer it, estimate a monthly net MRR growth rate (expansion − churn) and compound it: projected MRR = current MRR × (1 + net rate)^12. This calculator does exactly that, showing how small changes in the expansion or churn rate bend the ARR curve over a year.
Why compounding matters
A net monthly growth rate of 3% versus 1% sounds modest, but compounded over 12 months the first scenario produces 43% ARR growth while the second produces only 13%. This is why controlling churn is at least as important as driving expansion — both inputs compound in opposite directions.
Frequently asked questions
What is ARR and how is it calculated?
ARR (annual recurring revenue) = MRR × 12. It represents the annualized run-rate of your subscription revenue. It is not a trailing sum — it is a forward-looking rate based on today's active subscriptions. Annual contracts are included at their full value; monthly subscribers are multiplied by 12.
What is the difference between ARR and revenue?
ARR is normalized recurring revenue — it excludes one-time payments, professional services and usage overages. Reported GAAP revenue includes all those items and is recognized over the period of service. ARR is a management metric that shows the underlying subscription engine; GAAP revenue is an accounting measure.
How does churn affect ARR growth?
Churn directly reduces MRR each month, which flows into a lower ARR run-rate. Because the effect compounds, even a modest monthly churn rate (say 3%) wipes out 31% of revenue over a year if not offset by expansion or new business. The calculator shows how net MRR growth (expansion minus churn) shapes ARR trajectory.
What ARR growth rate is considered good?
Early-stage SaaS (under $1M ARR) should aim for 2–3× annual growth. At $1–10M ARR, 100%+ ("triple, triple, double, double, double") is the classic benchmark. At $10M+ ARR, 50–80% is strong. Growth rate expectation compresses as ARR scales.
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Benchmarks are general SaaS ranges and vary by segment, stage and business model. Last reviewed 2026-06-28.