MRR vs ARR
MRR and ARR measure the same subscription revenue on two different timescales. MRR is useful for tracking short-term momentum, ARR for reporting to investors and planning annual budgets.
MRR
The predictable revenue a subscription-based business expects to receive every month. It is calculated by multiplying total paying subscribers by average revenue per user.
ARR
The predictable revenue a subscription-based business expects to receive over a full year. It is typically calculated by multiplying monthly recurring revenue by twelve.
MRR, Time period:
One month
ARR, Time period:
Twelve months
MRR, Formula:
Sum of monthly recurring revenue
ARR, Formula:
MRR x 12
MRR, Best used for:
Spotting month-to-month trends and churn quickly
ARR, Best used for:
Annual planning, investor reporting, valuation
| Time period | One month | Twelve months |
|---|---|---|
| Formula | Sum of monthly recurring revenue | MRR x 12 |
| Best used for | Spotting month-to-month trends and churn quickly | Annual planning, investor reporting, valuation |