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ARR Calculator (Annual Recurring Revenue)

Calculate annual recurring revenue from your MRR or from individual contracts of any length, excluding one-time fees. Add the period's new, expansion, contraction and churned ARR to see the ARR bridge, net new ARR, growth, NRR and GRR.

Last updated:

Calculate ARR from
$
$

Setup fees, services, one-off charges to exclude

For average ARR per customer

ARR bridge for the period (optional)
$

From new customers

$

Upsells and upgrades

$

Downgrades

$

Cancelled customers

Repeats this period's growth rate; 0 to skip

Enter your values to see the result.
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How to use the ARR Calculator (Annual Recurring Revenue)

  1. Choose MRR or contracts as the source of your ARR.
  2. Enter MRR (minus any non-recurring revenue), or list contracts as customer, total value, term in months and optional one-time fees.
  3. Add the customer count for average ARR per customer.
  4. Enter the period's new, expansion, contraction and churned ARR to build the bridge; your current ARR is treated as the ending ARR.
  5. Press Calculate ARR to see ARR, the bridge, retention rates and the projection.

ARR formulas

  • From MRR: ARR = (MRR − non-recurring revenue) × 12
  • From a contract: ARR = (total contract value − one-time fees) ÷ term in months × 12
  • ARR bridge: ending ARR = starting ARR + new + expansion − contraction − churned
  • Net new ARR = new + expansion − contraction − churned; growth = net new ÷ starting ARR

Example with the sample contracts: Acme $36,000 for 12 months ($36,000 ARR), Globex $90,000 over 36 months with a $6,000 setup fee ($28,000), Initech $4,800 for 12 months ($4,800) and Umbrella $15,000 for 6 months with a $1,500 fee ($27,000). Total ARR is $95,800, or $7,983.33 of MRR.

Normalizing different billing terms

BillingPriceMRRARR
Monthly$500 / month$500$6,000
Quarterly$1,350 / quarter$450$5,400
Annual$5,000 / year$416.67$5,000
3-year prepaid$13,500 / 36 months$375$4,500

A prepaid multi-year deal brings in cash up front, but ARR counts only one year's share.

Tips for reporting ARR

  • Count ARR when a contract starts (or is signed, if that is your policy) and remove it when the customer cancels or the contract ends without renewal.
  • Exclude implementation, training and professional services fees, even if they recur occasionally.
  • Report the bridge every month or quarter; investors care about the mix of new, expansion and churn as much as the total.
  • Keep discounts in: use the price actually billed, not list price.

Frequently asked questions

What is ARR?

Annual recurring revenue (ARR) is the yearly value of a company's committed subscription revenue at a point in time. It normalizes monthly, quarterly and multi-year contracts to a one-year figure and excludes one-time fees, so it shows the run-rate of the recurring business.

How do you calculate ARR from MRR?

Multiply monthly recurring revenue by 12. For example, $85,000 of MRR equals $1,020,000 of ARR. Remove any one-time or non-recurring charges from MRR first.

How do you calculate ARR from a multi-year contract?

Divide the recurring part of the total contract value by the term in months and multiply by 12. A $90,000 three-year contract with a $6,000 setup fee has ($90,000 − $6,000) ÷ 36 × 12 = $28,000 of ARR.

What is an ARR bridge?

An ARR bridge (or ARR waterfall) explains how ARR changed over a period: starting ARR + new ARR + expansion ARR − contraction ARR − churned ARR = ending ARR. It shows whether growth comes from new customers or existing ones and how much is lost to downgrades and cancellations.

What is the difference between ARR and revenue?

Revenue is what is recognized in the accounts over a period and includes services and one-time fees. ARR is a forward-looking run-rate of recurring subscriptions only, measured at a point in time. A company that signed big contracts late in the year can have ARR well above its annual revenue.

What are NRR and GRR?

Net revenue retention (NRR) = (starting ARR + expansion − contraction − churn) ÷ starting ARR, so it can exceed 100% when upsells outweigh losses. Gross revenue retention (GRR) ignores expansion and is capped at 100%. Both measure how well the existing customer base holds its revenue.

Should usage-based or monthly-cancellable revenue count toward ARR?

Monthly subscriptions are normally included as MRR × 12 even though customers can cancel. Pure pay-as-you-go usage is often reported separately or included only for committed minimums. Whatever rules you choose, apply them consistently over time.

Are all the tools on FreeToolCabin tested for quality and accuracy?

Yes! Every tool on our site undergoes automated Q/A testing in real browser environments to ensure high precision, correct output, and zero errors. If you happen to spot a bug or have a suggestion, please contact us at [email protected] and our team will review it right away.

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