ARR Calculator

How to Use This Calculator

1. Enter MRR to instantly get ARR (MRR × 12).
2. Use From ACV tab for contract-based billing.
3. Use Multi-Year Contracts tab to separate TCV from ARR.
4. Switch to Professional for ARR movement waterfall, net retention, Magic Number, and Rule of 40.

Formula

Example

Frequently Asked Questions

• What is ARR? ▼
  Annual Recurring Revenue (ARR) is the annualized value of recurring subscription revenue. Simple formula: ARR = MRR × 12. For ACV-based billing: ARR = ACV × Number of Customers.
• What is the difference between ARR and TCV? ▼
  ARR is the annualized value of a contract (revenue recognized each year). TCV (Total Contract Value) is the total value of a multi-year deal. A 3-year $36,000 contract has TCV = $36,000 and ARR = $12,000.
• What is net ARR retention? ▼
  Net ARR Retention = (Starting ARR + Expansion − Churn − Contraction) / Starting ARR × 100%. Above 100% means expansion revenue outpaces churn — a key indicator of product-market fit.
• What is the Magic Number? ▼
  Magic Number = Net New ARR / Sales & Marketing Spend. A score above 0.75 indicates efficient growth. Above 1.0 is excellent and suggests scaling up sales investment.
• What is the Rule of 40? ▼
  Rule of 40 = ARR Growth Rate % + EBITDA Margin %. A score of 40 or above is considered healthy for SaaS. It balances growth against profitability — fast-growing companies can have negative EBITDA if growth rate exceeds 40%.

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