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ARR calculator.

Convert between MRR and ARR in either direction, then see your year-over-year growth and whether you pass the Rule of 40.

Free · Runs in your browser · Formulas shown

Your recurring revenue

Recurring subscription revenue only.

Convert
$

Growth (optional)

$

For year-over-year growth.

%

EBITDA or free cash flow margin, for the Rule of 40. Can be negative.

Annual recurring revenue

$144,000

$12,000 MRR × 12.

ARR
$144,000
MRR
$12,000
Year-over-year growth
60%
Rule of 40passes
50
The math

How ARR is calculated.

The examples use the numbers in the calculator above and update as you change them.
Annual recurring revenue

ARR = MRR × 12

$12,000 × 12 = $144,000
Monthly recurring revenue

MRR = ARR ÷ 12

$144,000 ÷ 12 = $12,000
Year-over-year growth

YoY growth = (ARR now − ARR a year ago) ÷ ARR a year ago

($144,000 − $90,000) ÷ $90,000 = 60%
Rule of 40

Rule of 40 = growth % + profit margin %

60 + (-10) = 50

Passes: growth and profit together reach 40.

Quick reference

MRR to ARR at a glance.

MRR and the ARR it corresponds to
MRRARR
$1,000$12,000
$5,000$60,000
$10,000$120,000
$25,000$300,000
$83,333$1,000,000
$100,000$1,200,000
FAQ

ARR questions.

How do you calculate ARR?

Multiply monthly recurring revenue by 12. $12,000 MRR is $144,000 ARR. For annual contracts, ARR is the yearly value of the active recurring contracts.

How do I convert ARR to MRR?

Divide by 12. $1,000,000 ARR is $83,333 MRR. Choose 'ARR to MRR' in the calculator to convert in that direction.

What is the difference between ARR and revenue?

ARR is a run-rate of recurring subscriptions at a point in time. Revenue is what you actually recognize in a period under accounting rules, and it includes one-time fees and services that ARR leaves out.

How do multi-year or monthly-paid annual contracts count in ARR?

At their annual value. A three-year contract worth $36,000 adds $12,000 of ARR, and an annual contract paid monthly still counts at its full yearly value.

Should usage-based revenue be included in ARR?

Only committed usage, such as a minimum spend in the contract. Variable usage on top is better reported separately, because it isn't guaranteed to recur.

What is the Rule of 40?

A SaaS company's growth rate plus its profit margin should add up to at least 40. Growing 60% a year at a −10% margin scores 50, which passes.

What is net new ARR?

New plus expansion plus reactivated ARR, minus contraction and churned ARR, over a period. It is net new MRR expressed per year; the MRR calculator breaks the movements down.

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