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Business Terms
ARR (Annual Recurring Revenue)
Definition
The yearly value of recurring revenue from subscriptions or contracts.
Overview
ARR is MRR × 12. It's used for annual planning, valuation, and tracking growth in subscription businesses.
Example
$10,000 MRR × 12 = $120,000 ARR.
Best Practices
Use for annual planning and reporting. Track ARR growth rate year-over-year.
Common Mistakes to Avoid
Including non-recurring revenue
Inconsistent with MRR calculation
Ignoring contraction
Frequently Asked Questions
When should I use ARR vs MRR?
ARR for annual planning and reporting; MRR for monthly operations and shorter-term tracking.