SaaS metric guide
How to Calculate ARR for SaaS
Annual recurring revenue expresses a recurring subscription base as an annualized number. It is useful for scale context, planning, and investor-style conversations, but it should be labeled clearly.
ARR formula
ARR run rate = MRR x 12
A company with $20,000 in MRR has a $240,000 ARR run rate. That does not mean the company has guaranteed $240,000 of collections. Churn, expansion, downgrades, pricing, and payment failures can change the actual year.
ARR vs booked ARR
ARR run rate annualizes the current recurring revenue base. Booked ARR depends on signed recurring contracts. For self-serve SaaS, MRR multiplied by 12 is often the fastest context. For contract-heavy SaaS, bookings, billings, recognized revenue, and ARR may need separate treatment.
Use an ARR calculator
Use the ARR run-rate calculator when you need a quick conversion, then use the main forecast calculator when you want to see how ARR changes as MRR grows or contracts.