Annual Recurring Revenue (ARR)

ARR is your MRR multiplied by 12. That's it. If your MRR is $10,000, your ARR is $120,000. It gives you a full-year view of subscription revenue, assuming nothing changes. Investors, board decks, annual planning: ARR is the number everyone reaches for first.

When to use ARR vs MRR

They measure the same thing at different time scales. In practice, MRR is more useful for tracking month-to-month movements and making operational decisions. ARR is what you quote during fundraising, what analysts use to compare SaaS companies, and what drives your valuation multiple.

If you primarily sell annual contracts, ARR is the natural metric. For monthly subscriptions, MRR gives you the real-time picture and ARR becomes a useful projection for longer-term planning.

Protecting your ARR

Every customer lost to churn directly reduces your ARR. Here's the thing: a 5% monthly churn rate translates to losing roughly 46% of your ARR over a year through customer attrition alone. We see this catch founders off guard because monthly churn numbers look manageable until you annualise them. Reducing involuntary churn through dunning is one of the most direct ways to protect and grow your ARR without spending more on acquisition.