What is the difference between MRR and ARR?

MRR is the normalized monthly value of all active subscriptions, and ARR is the same run rate expressed annually: ARR = MRR × 12. Monthly-billed, self-serve businesses usually report MRR, while sales-led companies on annual contracts usually report ARR. They describe the same underlying revenue at different time scales.

How do I calculate ARR from MRR?

Multiply MRR by 12. If your MRR is $9,960, your ARR is $119,520. Make sure the MRR figure is fully normalized first — annual and quarterly contracts divided into their monthly equivalents — or the multiplication just compounds the error.

Is ARR the same as annual revenue?

No. ARR is a forward-looking run rate — the value of active subscriptions at a point in time, multiplied by 12 — while annual revenue is the backward-looking GAAP total that also includes one-time fees and services. A growing company's ARR is typically higher than its trailing-twelve-month revenue.

Should one-time fees be included in MRR?

No. Only recurring subscription revenue counts: plan fees, per-seat charges and recurring add-ons, at the price actually paid after discounts. One-time setup fees, implementation work, professional services and non-recurring overages are all excluded from MRR.

Net-new MRR is the month's total change in MRR after all movements: new MRR plus expansion, minus contraction and churned MRR. It can be negative even while you are closing new deals — the classic sign that churn is outpacing acquisition.

What is a good MRR growth rate?

It depends on scale. As directional 2026 medians, sub-$1M ARR SaaS companies target roughly 8–15% month-over-month, $1–10M ARR companies cluster around 30–50% year-over-year, and the median drifts toward 25–30% past $10M ARR. Retention quality matters as much as the headline rate — fast growth on top of high churn rarely lasts.

SaaS Metrics

MRR & ARR Calculator

Turn plans, seats and billing terms into clean MRR and ARR — including net-new MRR after churn.

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What are MRR and ARR?

Monthly Recurring Revenue (MRR) is the normalized monthly value of all active subscriptions — every plan converted to its per-month price, regardless of billing term. Annual Recurring Revenue (ARR) is that same run rate expressed annually: ARR = MRR × 12. They matter because almost every other SaaS metric — growth rate, net revenue retention, CAC payback, burn multiple — is computed on top of them. Get MRR wrong and everything downstream is wrong too.

This calculator turns plans, seats and billing terms into clean MRR and ARR, and computes net-new MRR after expansion, contraction and churn. It is free, needs no sign-up, and runs entirely in your browser — nothing you type leaves the page.

The formula, with a worked example

Two formulas do the work:

ARR = MRR × 12
Net-new MRR = New + Expansion − Contraction − Churned

Say you run two plans. 40 customers pay $99/month on Starter: $3,960 MRR. 12 customers prepay $6,000/year on Pro: annual contracts get divided by 12, so each contributes $500/month — $6,000 MRR. Total MRR is $9,960 and ARR is $9,960 × 12 = $119,520. Note the prepay cash ($72,000 collected up front) never enters the MRR math — MRR measures run rate, not the bank account.

Now the month's movements. You close $1,400 of new MRR, upgrades add $600 of expansion, downgrades cost $350 and cancellations $450. Net-new MRR = $1,400 + $600 − $350 − $450 = $1,200, so you end the month at $11,160 MRR ($133,920 ARR).

Movement	What it captures	Effect
New MRR	First-time subscriptions from new customers	+
Expansion MRR	Upgrades, added seats, cross-sells	+
Contraction MRR	Downgrades and seat reductions	−
Churned MRR	Cancellations and non-renewals	−

What's a good MRR growth rate?

There is no benchmark for absolute MRR — a $50k-MRR bootstrapper can be healthier than a $500k-MRR burner. Growth rate is what gets benchmarked. As directional 2026 medians: private B2B SaaS under $1M ARR typically grows 8–15% month-over-month when things are working; $1–10M ARR companies cluster around 30–50% year-over-year; past $10M ARR the median settles near 25–30%. Composition matters as much as the rate — if net-new MRR comes entirely from new logos while churn eats the base, growth stalls the moment acquisition slows. Cross-check with the NRR calculator and the churn rate calculator, and see the full band tables on the benchmarks page.

Common MRR mistakes

Four errors show up constantly. One-time fees — setup, implementation, professional services — are not recurring and do not belong in MRR. Annual prepays get divided by 12, never booked as a single month's MRR spike. MRR is not GAAP revenue: it is a run-rate metric, so do not reconcile it against your P&L and panic at the mismatch. And use the price customers actually pay — a $199 plan sold at a 50% discount is $99.50 of MRR, not $199. If the per-customer numbers still look odd, sanity-check them with the ARPU calculator.

See all 2026 SaaS benchmark tables →

Frequently asked questions

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GRR

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