Unit economics
Annualize monthly recurring revenue into ARR, with a 12-month run-rate projection.
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- Claude, via MCP
How do you convert MRR to ARR?
Multiply monthly recurring revenue by 12: ARR = MRR × 12. MRR should hold only recurring subscription revenue, with annual plans divided by 12 and taxes, setup fees and one-time charges left out. So $50,000 MRR is $600,000 ARR, and ₹25 lakh MRR is ₹3 crore ARR. It is a run-rate, not recognised annual revenue.
At today's $50,000 MRR, run-rate ARR is $600,000. Add expected monthly expansion or churn above to see where that lands 12 months out.
ARR here is a run-rate, MRR × 12, not audited annual revenue. The projection assumes the monthly net-new figure holds flat for all 12 months, a simplification, not a forecast.
About this calculator
ARR is just MRR multiplied by twelve, a founder or finance lead usually reaches for this the moment MRR starts getting quoted in a board deck, a term sheet, or a "what's your ARR" question from a prospect. The multiplication is trivial. What's useful is seeing that run-rate number move: enter the monthly dollars you expect to add from new business and expansion, and what you expect to lose to churn and contraction, and this projects where ARR lands a year out if that pace holds.
How to use it
- Enter your current MRR, the recurring revenue you're collecting this month.
- Leave the two optional fields at 0 for a plain ARR = MRR × 12 annualization, useful for a quick investor update or dashboard figure.
- To project forward, enter the monthly dollar amount you expect from new business plus expansion (upsells, seat growth), and separately the monthly dollar amount you expect to lose to churn and contraction.
- Read the projected MRR and ARR 12 months out, plus the dollar and percentage change versus today's run-rate.
Methodology
Run-rate ARR is simply current MRR × 12. That's the only number this calculator shows when both delta fields are left at 0, deliberately: annualizing MRR shouldn't require assumptions.
When you fill in expansion and churn, the tool computes a flat net-new figure per month (expansion + new business, minus churn and contraction), then projects it forward linearly: MRR twelve months out equals current MRR plus twelve times that monthly net-new figure. Projected ARR is that projected MRR, annualized the same way.
This is intentionally simple, a straight-line projection, not a compounding growth-rate model. Real MRR growth compounds (expansion this month grows the base expansion is calculated against next month), so if your net-new pace is itself accelerating or decelerating, treat this as a floor/ceiling sanity check rather than a precise forecast.
ARR from this calculator is a run-rate metric: what current MRR implies annualized, not audited, GAAP-recognized annual revenue. The two diverge whenever revenue recognition, contract terms, or seasonality don't map cleanly onto "this month × 12."
MRR to ARR and the 12-month projection
ARR = MRR × 12 Net new MRR per month = (New + expansion MRR) − (Churned + contraction MRR) MRR in 12 months = MRR + Net new MRR per month × 12 Projected ARR = MRR in 12 months × 12 ARR change % = (Projected ARR − ARR) ÷ ARR × 100
- MRR
- Current monthly recurring revenue: the monthly-normalised value of all active paid subscriptions.
- New + expansion MRR
- Monthly dollars you expect to add from new customers, upgrades and seat growth (one combined input).
- Churned + contraction MRR
- Monthly dollars you expect to lose from cancellations and downgrades (one combined input).
- Projected ARR
- Run-rate ARR twelve months out if the monthly net-new figure stays flat.
Normalise before you multiply. Stripe counts a $600 annual plan as $50 MRR and excludes taxes, free plans and metered usage products from MRR. ChartMogul also excludes setup and consulting fees and counts discounted customers at the price they actually pay. The projection is linear: twelve equal monthly additions, no compounding. To split the movement into new, expansion, contraction and churn for one period, use the MRR bridge planner.
Worked example: $50,000 MRR with expected expansion and churn
A B2B SaaS company bills $50,000 MRR. Its CRM and billing data suggest it adds about $4,000 a month from new deals and upgrades, and loses about $1,500 a month to cancellations and downgrades.
- ARR today = $50,000 × 12 = $600,000.
- Net new MRR per month = $4,000 − $1,500 = $2,500.
- MRR in 12 months = $50,000 + $2,500 × 12 = $50,000 + $30,000 = $80,000.
- Projected ARR = $80,000 × 12 = $960,000.
- ARR change = $960,000 − $600,000 = $360,000, which is 60% growth.
- Same maths in rupees: ₹25 lakh MRR gives ₹3 crore ARR; adding ₹2 lakh, losing ₹75,000 a month, gives ₹40 lakh MRR and ₹4.8 crore ARR in a year.
A 60% run-rate growth pace is well above the 22% median for private B2B SaaS that SaaS Capital reported for 2025 (table below). Before taking it to a board, check that the $4,000 a month is repeatable and that the $1,500 includes contraction as well as cancellations. To value that ARR, take it to the ARR and SaaS valuation calculator.
Private B2B SaaS median annual growth (2025, SaaS Capital survey)
| Group | Median growth | Prior year |
|---|---|---|
| All companies | 22% | 25% (2024) |
| Bootstrapped | 20% | 23% (2024) |
| Equity-backed | 25% | 25% (2024) |
| Share with flat or negative growth | 7.3% | 6.9% (2024); peak of 13% in 2020 |
What is a good MRR to ARR growth rate?
There is no good ARR in absolute terms, only good growth for your size and funding. Compare the ARR change % from this calculator with the SaaS Capital medians above:
- Below 20%: under the 2025 median for bootstrapped companies. Look at churn and contraction first, because they reduce every month of the projection.
- 20% to 25%: around the median for private B2B SaaS.
- Above 25%: ahead of the equity-backed median. Check that the new + expansion figure is not one unusual month.
Retention moves this number a lot. SaaS Capital found that moving NRR from the 90–100% range to 100–110% adds about 5 percentage points of growth. The net revenue retention forecaster shows where your retention is heading.
MRR and ARR in India vs the US
Keep GST out of MRR. Stripe excludes taxes from MRR, and the same logic applies to rupee billing through Razorpay or invoices: GST is collected for the government, not earned. When a contract is billed annually or quarterly in advance, divide each invoice by the months it covers rather than counting the cash in the month it arrives. If your billing system and CRM disagree on MRR, a RevOps audit is usually where that gets reconciled. Report domestic ARR in lakh and crore, and give USD ARR separately if you sell abroad.
US SaaS investors usually expect ARR on a run-rate basis, though some boards separate contracted ARR (signed annual or multi-year contracts) from run-rate MRR × 12. ChartMogul notes that the stricter "annual recurring revenue" definition leaves out contracts shorter than 12 months. State which definition your number uses. Sales tax, like GST, stays out of MRR.
Common MRR to ARR mistakes
- Counting an annual prepayment as one month of MRR. A $12,000 annual contract is $1,000 MRR, not $12,000.
- Including GST, sales tax, setup fees or professional services in MRR, which inflates ARR by revenue that will not repeat.
- Counting free-plan users or trial accounts as MRR before they pay.
- Entering only cancellations in the churn field and forgetting downgrades (contraction).
- Annualising one unusually strong month. If a month looks unrepresentative, use a trailing three-month average MRR.
- Reading the 12-month projection as a forecast. It assumes the same net-new dollars every month.
Sources
- Billing analytics, Stripe Docs. Accessed 2026-10-17.
- Monthly Recurring Revenue (MRR), ChartMogul. Accessed 2026-10-17.
- ARR: Annual Recurring Revenue vs Annualized Run Rate, ChartMogul. Accessed 2026-10-17.
- 2026 Private B2B SaaS Company Growth Rate Benchmarks, SaaS Capital. Accessed 2026-10-17.
FAQ
For a straight run-rate figure, yes, that's the standard convention. But ARR should reflect what a customer base is worth on an annualized basis, so if this month's MRR was unusually high or low (a one-off surge, a seasonal dip), MRR × 12 will over- or under-state your real annual run-rate. Use a trailing average MRR if a single month looks unrepresentative.
A flat dollar delta is easier to reason about with real numbers pulled from your CRM or billing system (this month's new + expansion MRR, this month's churned MRR), and it avoids compounding a growth-rate assumption that might not hold. If your growth is genuinely compounding month over month, this projection will understate where you land, treat it as a conservative baseline.
The calculator combines them into one input on purpose, both add to MRR the same way. If you need the breakdown, new vs. expansion vs. resurrected vs. contraction vs. churn, use the MRR Bridge Planner instead, it reconciles all five movements for a single period rather than projecting forward.
Most SaaS boards want both: MRR shows recent momentum and month-to-month movement, ARR gives a stable annualized figure for comparing against valuation multiples, growth targets, and other companies. Neither replaces GAAP revenue on a P&L, both are operating metrics.
No, this tool only annualizes the recurring figure you enter. If your "MRR" number includes one-time implementation fees, professional services, or non-recurring add-ons, strip those out first, otherwise both the ARR figure and the projection will be inflated by revenue that won't repeat next month.
Divide each contract's annual value by 12 to get its MRR, add up all customers, then multiply by 12. For a single annual contract this just returns its yearly value. Multi-year contracts count only the value of one year, not the total contract value.
Yes, and in a growing company it usually is. ARR is a snapshot of the current run-rate, while annual revenue adds up what you earned month by month, including lower earlier months. A company that grew from $30,000 to $50,000 MRR during the year ends with $600,000 ARR but earned less than that.
After. MRR and ARR should reflect what customers actually pay. ChartMogul counts a discounted customer at the discounted price, and Stripe lets you choose whether to subtract one-time discounts, with permanent recurring discounts always subtracted.
Run-rate takes any revenue figure for a period and annualises it, including one-time revenue. ARR applies the same annualisation only to recurring subscription revenue. For a SaaS company with no one-time fees they match; with services or setup fees, run-rate is higher.
It depends on how predictable it is, and teams disagree. Stripe's standard MRR excludes metered usage products and offers usage MRR as a separate preview feature. If you include usage revenue, use a trailing average and say so, because it moves more than seat or plan revenue.
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