Business

Verified calculator with a transparent formula

Business

Annual Recurring Revenue Calculator.

Calculates your annual recurring revenue (ARR) based on the number of customers and their average monthly subscription fee.

Results update live as you type.
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Your inputs

How it works

  1. 1

    Enter the total number of paying customers.

  2. 2

    Enter the average monthly revenue per customer (ARPU).

  3. 3

    The calculator multiplies customers by ARPU and then by 12 to get annual recurring revenue.

customers * arpu * 12

Frequently asked questions

What is ARR?

ARR stands for Annual Recurring Revenue, a metric used by subscription businesses to show the yearly value of recurring revenue from customers.

How is ARR different from total revenue?

ARR only counts recurring revenue from subscriptions, excluding one-time fees or non-recurring charges.

Should I include churn in this calculation?

This calculator gives a snapshot of current ARR. To account for churn, you would need to adjust the customer count over time.

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Annual Recurring Revenue

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Estimate for general guidance only — verify important decisions with an appropriate professional.

How it works

Calculates your annual recurring revenue (ARR) based on the number of customers and their average monthly subscription fee.

  1. Enter the total number of paying customers.
  2. Enter the average monthly revenue per customer (ARPU).
  3. The calculator multiplies customers by ARPU and then by 12 to get annual recurring revenue.

Formulas

The math behind this calculator, written out so you can verify the result.

ARR Formula

ARR = Number of Customers × Average Revenue per Customer per Month × 12

This formula annualizes the monthly recurring revenue by multiplying by 12 months.

Example:

Input: Customers = 100, ARPU = $50

Calculation: 100 × $50 × 12

Result: $60,000

Real-world use cases

Where this calculation shows up in everyday life.

Business Planning

Estimate annual revenue to set growth targets and budgets.

Example: A SaaS startup with 200 customers at $30/month has ARR of $72,000.

Investor Reporting

Provide a key metric to investors to show business health.

Example: Report ARR growth quarter over quarter.

Pricing Strategy

Evaluate the impact of changing prices on annual revenue.

Example: Raising ARPU from $20 to $25 increases ARR by 25%.

Tips and common mistakes

Tips

  • Use consistent time periods: ensure ARPU is monthly and customers are current paying customers.
  • Exclude free trials and non-recurring revenue for accurate ARR.
  • Track ARR over time to see growth trends.
  • Consider segmenting customers by plan type for deeper analysis.

Common Mistakes to Avoid

  • Including one-time setup fees in ARR.
  • Using annual revenue per customer instead of monthly.
  • Forgetting to multiply by 12 when using monthly ARPU.

Assumptions and limitations

  • Use the stated inputs and units.
  • Results are estimates for planning and education.
  • Check measurements and source data before making an important decision.