MRR & ARR Calculator
Monthly & annual recurring revenue
200 customers paying an average of $50 a month is $10,000 of MRR and $120,000 of ARR. Enter your own paying customers and average revenue per account for monthly and annual recurring revenue, and add a monthly growth rate for a 12-month ARR projection that compounds rather than multiplies.
MRR and ARR
As an mrr calculator, a recurring revenue calculator, or simply for mrr to arr conversion, the arithmetic is one multiplication.
MRR is paying customers multiplied by average revenue per account. ARR is MRR × 12. 200 customers at $50 a month is $10,000 MRR and $120,000 ARR.
The distinction that matters is that both are run rates, not accounting revenue. They describe what you would earn over the next twelve months if nothing changed — a forward-looking snapshot of the subscription base, not a record of money received. A company can have $120,000 ARR having collected $30,000 all year.
What counts as recurring
| Include | Exclude |
|---|---|
| Monthly subscription fees | One-off setup and onboarding fees |
| Annual contracts ÷ 12 | Professional services and consulting |
| Recurring add-ons and seats | Hardware sales |
| Committed usage minimums | Variable overage above commitment |
| — | Trials and unpaid accounts |
| — | Discounts (net them off, do not ignore them) |
An annual contract is divided by 12, not counted in the month it was signed — that is the most common inflation of the number. Genuinely variable usage revenue does not belong in MRR at all, because it is not recurring in any committed sense.
Growth compounds, so small rates matter
Enter a monthly growth rate and the calculator compounds it across twelve months, then annualises the result. Starting from $10,000 MRR:
| Monthly MRR growth | Projected ARR | Multiple |
|---|---|---|
| 1% | $135,219 | 1.13× |
| 2% | $152,189 | 1.27× |
| 3% | $171,091 | 1.43× |
| 5% | $215,503 | 1.80× |
| 8% | $302,180 | 2.52× |
| 10% | $376,611 | 3.14× |
| 15% | $642,030 | 5.35× |
5% a month sounds modest and nearly doubles the business in a year. 10% a month more than triples it. This is also why growth rates are hard to sustain: maintaining 10% monthly means adding an ever-larger absolute amount of new MRR every single month, and the same percentage becomes a much bigger sales target as the base grows.
The venture benchmark for that is T2D3 — triple, triple, double, double, double. From $1M ARR that is $3M, $9M, $18M, $36M, $72M over five years. Very few companies manage it, and it is a description of outliers rather than a target for a normal business.
The MRR movement that actually explains growth
Net MRR growth is the sum of four separate flows, and a single growth percentage hides all of them:
| Component | Source | Direction |
|---|---|---|
| New | First-time customers | + |
| Expansion | Upgrades, extra seats, add-ons | + |
| Contraction | Downgrades | − |
| Churned | Cancellations | − |
Two companies can both report 5% net growth while being in completely different health. One adds 6% new against 1% churn; the other adds 15% new against 10% churn and is running a treadmill — acquiring furiously to stand nearly still, with acquisition cost rising as the base grows.
The metric that captures this is net revenue retention: expansion minus contraction and churn, on the existing base only. Above 100% means the base grows without a single new customer, which is the strongest signal in subscription economics. The churn rate calculator covers the loss side.
Common ways MRR gets overstated
- Counting an annual contract in full in the month it was signed rather than dividing by 12.
- Including setup fees, services or hardware, none of which recur.
- Counting trials or unpaid accounts as customers.
- Ignoring discounts and booking list price rather than what is actually billed.
- Including variable overage that may not repeat next month.
- Quoting ARR as though it were revenue. ARR is a run rate; cash collected is a different number, and on annual billing the two diverge sharply.
None of these are dishonest by intent, and all of them make the number bigger. If you present ARR to anyone external, state your definition alongside it.
MRR only means something next to four other numbers
Recurring revenue measures the size of the subscription base. It says nothing about whether that base leaks, what filling it costs, or how long the money takes to come back — and a business can post record MRR while every one of those is going the wrong way. Four metrics complete the picture.
| Metric | Question it answers | Rough target |
|---|---|---|
| MRR / ARR | How big is the recurring base? | Growing |
| Churn rate | Does the base leak? | Under 1% monthly for SMB |
| CAC | What does growth cost? | Judged against LTV |
| CAC payback | How fast does that cost return? | Under 12 months |
| LTV : CAC | Is the loop profitable at all? | About 3:1 |
Churn is the one that quietly decides the rest, because it sets how long a customer stays: average lifetime is roughly 1 ÷ churn, so 5% monthly churn means the average account lasts about 20 months and every new sale has to replace a lost one before it grows anything. A smaller company with low churn and four-month payback compounds past a larger one with high churn and an eighteen-month payback, whatever the two MRR figures say.
What the MRR and ARR figures assume
MRR is customers × ARPU and ARR is MRR × 12. The projection compounds monthly growth across twelve months and then annualises: MRR × (1 + g)¹² × 12.
- The projection is an end-of-year run rate, not revenue earned during the year. It answers "what will ARR be in twelve months", not "what will we collect".
- Growth is compounded, not multiplied. 5% monthly is 1.80× over a year, not 1.60×. Sustaining a fixed percentage requires an increasing absolute amount of new MRR each month.
- Net growth only. The four MRR components — new, expansion, contraction and churn — are described in the guide but not modelled separately; the calculator takes the net figure.
- ARPU is a flat average. A base mixing $10 and $10,000 accounts is poorly described by one average, so segment before relying on it.
- Not modelled: cash collection timing, annual prepayment, discounts, usage-based revenue and currency effects.
Reviewed September 2026.
Figures reviewed . Every worked example on this page is checked against the calculator above.
MRR & ARR Calculator: frequently asked questions
How do I calculate MRR?
Multiply paying customers by average revenue per account per month. 200 customers at $50 is $10,000 MRR. Count only recurring subscription revenue, and divide annual contracts by 12 rather than booking them in one month.
Is ARR just MRR times 12?
Yes for a steady book of business. Both are run rates describing what you would earn over the next year if nothing changed, not a record of cash collected — a company can have $120,000 ARR having received far less.
What should be excluded from MRR?
One-off setup fees, professional services, hardware, trials, unpaid accounts and variable usage above any committed minimum. Discounts should be netted off rather than ignored.
How do I count annual contracts in MRR?
Divide the contract value by 12 and count that each month for the term. Booking the full amount in the signing month is the most common way MRR gets overstated.
What is a good MRR growth rate?
5% a month nearly doubles a business in a year and 10% more than triples it. Early-stage companies often target 10 to 15%, but sustaining a percentage gets harder as the base grows, since the absolute amount required rises every month.
What is T2D3?
Triple, triple, double, double, double — a venture growth benchmark taking $1M ARR to $72M over five years. It describes outliers rather than a realistic target for most businesses.
What are the four components of MRR movement?
New MRR from first-time customers, expansion from upgrades, contraction from downgrades, and churned MRR from cancellations. A single net growth figure hides all four, and two companies with the same net growth can be in very different health.
What is net revenue retention?
Expansion revenue minus contraction and churn, measured on the existing customer base only. Above 100% means revenue grows with no new customers at all, which is the strongest signal in subscription economics.