ARR movement check
A SaaS business starts with $24,000 MRR, adds $3,600 new MRR, $900 expansion, $400 contraction and $1,200 churned MRR.
- Starting MRR: $24,000
- New MRR: $3,600
- Expansion MRR: $900
- Churned MRR: $1,200
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ARR Calculator
Convert monthly recurring revenue into annual recurring revenue and model ARR movement.
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ARR Calculator
Use this to estimate current ARR, ending ARR and ARR growth after new, expansion, contraction and churned MRR.
How to use this calculator
Start with conservative inputs, copy the result, then test a best-case and worst-case version. For production decisions, compare the estimate against actual accounting, analytics and payment data.
Best used for
Use this when the main question is annual recurring revenue and you want to convert MRR into ARR after new, expansion, contraction and churn movement.
Formula
ARR annualizes recurring revenue by multiplying MRR by 12. Modeling the MRR movement first makes the ARR estimate more useful than a single static conversion.
Formula
Ending MRR = starting MRR + new MRR + expansion MRR - contraction MRR - churned MRR. ARR = ending MRR * 12.
Example
How to read the result
- Ending ARR should be based on normalized ending MRR, not a one-time cash collection.
- Positive ARR growth means the recurring revenue base expanded during the period.
- Contraction and churn should be separated because one keeps the account and one loses it.
Common mistakes
- Multiplying cash collected by 12 instead of normalized MRR.
- Including professional services, setup fees or one-time usage spikes in ARR.
- Ignoring contraction MRR because the customer did not fully churn.
FAQ
How do you calculate ARR from MRR?
ARR is usually calculated as MRR multiplied by 12. Use normalized recurring revenue and exclude one-time setup, services or usage fees unless they are recurring.
Is ARR the same as booked contract value?
No. ARR is normalized recurring revenue. Bookings or contract value can include timing, multi-year commitments and non-recurring fees.
Should churned MRR and contraction MRR be separate?
Yes. Churn means the account left. Contraction means the account stayed but pays less. They imply different retention problems.
Important limits
- ARR assumes recurring revenue stays active for a year; it is not cash collected.
- Exclude one-time implementation fees when comparing ARR between periods.