ARR Calculator

ARR formula: Take your MRR and multiply by 12. That's it. If your MRR is $10,000, your ARR is $120,000. For mixed billing periods, normalise everything to monthly first: weekly × 4.33, quarterly ÷ 3, annual ÷ 12.

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. We cover this in more detail in our ARR vs MRR guide.

Here's the thing: a 5% monthly churn rate doesn't sound alarming, but annualised it means you're losing nearly half your ARR each year. The portion caused by failed payments is entirely recoverable through dunning.

The milestones most founders and investors use: $1M ARR signals meaningful traction and usually comes with a small team proving product-market fit. $5M ARR is where most VCs start paying serious attention. $10M+ ARR puts you in scale-up territory.

Growth rate matters more than the absolute number, especially early on. A company doing $500K ARR growing 3x year-over-year is more interesting than one doing $2M ARR growing 20%. Investors typically look for 2-3x annual growth at the early stages, tapering to 50-100% as you scale past $10M.

Valuation multiples range from 2-5x ARR for bootstrapped or slow-growth businesses, up to 8-20x for high-growth venture-backed companies. Net revenue retention above 120% and gross margins above 80% push multiples higher.