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★ What is our recurring revenue run-rate for a year?

Annual Recurring Revenue (ARR) Calculator

Calculate annual recurring revenue from monthly MRR and annual contracts. Free ARR calculator with what counts and what does not.

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$
$

Sum of active yearly contracts.

Your ARR

$276,000

  • Equivalent MRR: $23,000.
  • Share from annual plans: 22%.

ARR = monthly-plan MRR × 12 + annual contract value of yearly plans

ARR: $276,000.

ARR is the scoreboard. If you need product shipped faster to move it, that's my job.

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01

How it works

ARR = monthly-plan MRR × 12 + annual contract value of yearly plans

Annualize monthly subscriptions and add the yearly value of annual contracts. Use the contract value, not the cash collected this year.

Leave out implementation fees, consulting, one-off purchases and trials. Investors will strip them out, and it is better that your number matches theirs.

02

Worked example

A company has $18,000 MRR from monthly subscribers and $60,000 in active annual contracts.

ARR worked example
InputValue
MRR from monthly plans$18,000
Annual plans, total yearly value$60,000
ARR$276,000
03

Benchmarks

ARR is a definition, not a score, so there is no benchmark. What matters is that it only includes recurring revenue: one-off setup fees, services and usage spikes stay out.

Directional: these are rules of thumb, not universal standards. Compare yourself with companies at your stage, selling to the same kind of customer.

04

How to improve it

  • Convert monthly subscribers to annual plans; it also cuts churn.
  • Add a tier above your most popular plan for heavier users.
  • Turn recurring services work into a productized subscription.
  • Use the MRR growth calculator to see the monthly pace needed to hit an ARR target.
05

Questions founders actually ask

Is ARR just MRR × 12?
For a business with only monthly plans, yes. With annual contracts, add their yearly value directly; dividing and multiplying them by 12 gives the same answer.
Do usage-based charges count as ARR?
Only the committed or reliably recurring part. Many companies report committed ARR separately from usage revenue to avoid overstating it.
Do one-time setup fees count?
No. ARR only counts revenue that recurs. Setup, onboarding and professional services fees are reported separately.
What is the difference between ARR and revenue?
Revenue is what you recognized in a period under accounting rules. ARR is a forward-looking run-rate of recurring contracts. They diverge with discounts, services and timing.
06

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07

More from the workbench

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Fine print

Tools: on the house.
Engineer: by the hour.

Moving them is the expensive part, and the part I'm good at: activation flows, upsell moments and the product work behind better numbers.

I'm Himanshu, an AI and full-stack engineer. I build MVPs, AI agents and the growth plumbing around them for early-stage startups.

Hire me →My projects