How do I calculate ARR (Annual Recurring Revenue)?

Use the formula(s) on this page. Keep inputs consistent by period and basis.

What are good benchmarks?

Benchmarks vary by model and stage. See Benchmarks on this page for ranges.

Inconsistent definitions/time windows; wrong basis (revenue vs gross profit).

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GLOSSARY

ARR (Annual Recurring Revenue)

Annualized recurring revenue from subscriptions.

Why it matters

Standardizes revenue for annual comparisons and valuation. Derived from MRR.

Benchmarks

Use ARR milestones to frame stage: Pre‑seed <$500k; Seed ~$500k–$1.5M; A ~$1.5M–$5M (varies).

Worked example

MRR $120k → ARR = 120k×12 = $1.44M.

Common pitfalls

Including non‑recurring revenue; using bookings instead of live MRR; double‑counting usage spikes.

How to show in your deck

Back to Glossary

GLOSSARY

ARR (Annual Recurring Revenue)

Annualized recurring revenue from subscriptions.

Why it matters

Standardizes revenue for annual comparisons and valuation. Derived from MRR.

Benchmarks

Use ARR milestones to frame stage: Pre‑seed <$500k; Seed ~$500k–$1.5M; A ~$1.5M–$5M (varies).

Worked example

MRR $120k → ARR = 120k×12 = $1.44M.

Common pitfalls

Including non‑recurring revenue; using bookings instead of live MRR; double‑counting usage spikes.

ARR (Annual Recurring Revenue)

Why it matters

Benchmarks

Worked example

Common pitfalls

How to show in your deck

ARR (Annual Recurring Revenue)

Why it matters

Benchmarks

Worked example

Common pitfalls

How to show in your deck

Deck snippet

Formulas

FAQs

Related terms

Why it matters

Benchmarks

Worked example

Common pitfalls

How to show in your deck

Why it matters

Benchmarks

Worked example

Common pitfalls

How to show in your deck

Deck snippet

Formulas

FAQs

How do I calculate ARR?

What are good benchmarks?

Common pitfalls?

Related terms