What are MRR and ARR?
Monthly recurring revenue (MRR) and annual recurring revenue (ARR) are the predictable subscription revenue a SaaS business earns each month or year. They are the headline numbers for boards and investors because they are recurring and forecastable, unlike one-time fees. MRR is the operational view; ARR is the annualized view used for reporting and valuation.
How this calculator works
The formula: MRR = active customers × ARPA ARR = MRR × 12 Net new MRR (mo) = (new customers × ARPA) − (MRR × churn rate) Projected ARR = MRR compounded 12 months, then × 12
The projection compounds month by month: each month adds new-customer MRR and removes churned MRR from the growing base, so it reflects real momentum rather than a flat line.
MRR vs ARR
| Metric | Time frame | Best for |
|---|---|---|
| MRR | Monthly | Tracking net new growth and momentum |
| ARR | Annual (MRR × 12) | Board reporting and valuation |
Only count recurring subscription revenue. Exclude one-time setup fees and services, and normalize annual contracts to MRR by dividing by 12.
How to grow MRR faster
- Feed the top of funnel predictably. Compounding organic search turns new-customer adds into a reliable monthly input.
- Cut churn. Every point of churn is MRR your acquisition has to replace before you grow.
- Add expansion. Seat growth and upsells lift ARPA and net new MRR without new logos.
Frequently asked questions
How do you calculate MRR and ARR?
MRR = active customers × ARPA; ARR = MRR × 12. 400 customers at $500 ARPA is $200,000 MRR and $2.4M ARR. Count only recurring subscription revenue.
What is the difference between MRR and ARR?
Same recurring revenue, different time frame. MRR is the monthly view for momentum; ARR is the annualized view (MRR × 12) for board reporting and valuation.
What is net new MRR?
The change in MRR in a month: new plus expansion, minus contraction and churn. Positive means the base is growing; negative means churn is outrunning new sales.
Should annual contracts count as MRR or ARR?
Both, normalized. Book the full value as ARR and divide by 12 for MRR, so a $24,000 annual deal adds $2,000 to MRR.