ARR Calculator
Annual Recurring Revenue (ARR) is the single most important top-line metric for subscription-based and SaaS businesses. It represents the annualized value of all active recurring contracts, stripping out one-time fees and variable charges to give a clean, predictable revenue figure. Investors use ARR multiples to value SaaS companies, boards use ARR to set growth targets, and finance teams use ARR to model future cash flows. This calculator derives ARR from your current MRR, or lets you build it up from individual contract components including new, expansion, contraction, and churned ARR. It also shows implied ARR growth and the ARR multiple at various valuation scenarios.
ARR formula
ARR = MRR * 12
Net New ARR = New ARR + Expansion ARR - Churned ARR
Why ARR matters
- ARR is the primary valuation metric for SaaS companies at Series B and beyond.
- Net New ARR indicates how much incremental annual revenue was added in a period.
- ARR growth rate above 100% year-over-year (doubling) is considered exceptional for enterprise SaaS.
- ARR / headcount is used as an efficiency metric alongside the Rule of 40.
ARR: frequently asked questions
What is ARR?
Annual Recurring Revenue (ARR) is the normalized annual value of all active subscription contracts. It excludes one-time fees and usage-based charges. ARR is calculated as MRR multiplied by 12.
How is ARR different from total revenue?
ARR includes only recurring subscription revenue. Total revenue includes one-time fees, professional services, and usage charges. ARR is more predictable and is the preferred metric for SaaS valuation.
What ARR multiple do SaaS companies trade at?
Publicly traded SaaS companies often trade at 5x to 15x ARR, depending on growth rate, retention, and profitability. High-growth companies with strong NRR may command 15x to 20x ARR or higher.
How do I calculate ARR from contracts?
Sum the annual contract value of each active subscription. For monthly contracts, multiply the monthly fee by 12. Exclude one-time setup fees, services, and variable usage charges.
Should I include discounts in ARR?
ARR should reflect the actual contracted value after discounts. Multi-year deals with annual payment should be divided by the contract length in years to get the normalized annual amount.
Sources
- U.S. Securities and Exchange Commission: EDGAR Company Filings.
- U.S. Small Business Administration: Manage Your Finances.
Reviewed by the CalculatorHub team, edited by James Graham, 14 June 2026. See our methodology.