ARR(Annual Recurring Revenue)
E-commerce
E-commerce
ARR stands for Annual Recurring Revenue: your recurring subscription revenue expressed on a yearly basis. One-off projects and setup fees do not count.
If your MRR (Monthly Recurring Revenue) represents your recurring monthly revenue, calculate ARR as MRR × 12. This annualises your current monthly revenue; it is not the revenue you actually earned over the past twelve months.
ARR helps you track a subscription model. Also look at new subscriptions, expansions, reductions and cancellations (churn): a higher total does not automatically explain where growth comes from.
ARR is not profit or guaranteed future revenue. Allow for cancellations and use a consistent definition of recurring revenue when comparing periods.
Related terms
- MRR and ARRMRR is your recurring monthly subscription revenue, ARR is the same revenue annualised. One-off projects don't count.
- ChurnChurn is the share of customers or subscribers leaving within a period. It's the counterpart of retention.
- FreemiumFreemium combines an ongoing free basic version with paid extras. Explore how it differs from a free trial and what to watch out for.