ARR (Annual Recurring Revenue)
The value of recurring revenue normalized to a one-year period for subscription businesses.
Definition
Annual Recurring Revenue (ARR) is a metric that shows the money that comes in every year for the life of a subscription or contract. It normalizes different contract lengths and pricing models to provide a standardized view of recurring revenue.
How to Calculate
Formula:
ARR = MRR × 12
Real-World Example
SaaS Company: $50,000 MRR
ARR = $50,000 × 12 = $600,000