ARR is MRR times twelve. The arithmetic is trivial; what is worth stating is that ARR is a run rate, not a record of what you collected over the past year.
Fees & Pricing
The customers you lose without anyone deciding to leave.
ARR to MRR Calculator
Convert between annual and monthly recurring revenue, in both directions.
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ARR is simply MRR × 12. It is a run rate, not what you booked over the past year — a company at $1M ARR has usually collected considerably less than $1M in the last twelve months.
Monthly recurring revenue$83,333from $1,000,000 ARR
- ARR
- $1,000,000
- MRR
- $83,333
- Per quarter
- $250,000
- Per week
- $19,231
- Per day
- $2,740
Worth remembering: $1M ARR is $83,333 MRR — which is less than $100K MRR, not more. The two milestones are commonly ranked the wrong way round.
Common conversions
| ARR | MRR |
|---|---|
| $120,000 | $10,000 |
| $500,000 | $41,667 |
| $1,000,000 | $83,333 |
| $1,200,000 | $100,000 |
| $10,000,000 | $833,333 |
ARR is a run rate
A company reaching $1M ARR in December has not collected $1M that year. It is running at a rate which, if sustained for twelve months, would produce $1M. A business that grew from $200K to $1M ARR over the year probably collected somewhere near $500K.
That distinction matters when comparing ARR against costs, which are actual rather than annualised.
What counts as recurring
- Include subscriptions, retainers and committed contracts.
- Include annual contracts, divided by twelve for MRR.
- Exclude one-off setup, implementation and professional services fees.
- Exclude usage revenue that is genuinely unpredictable, or report it separately.
Counting one-off revenue in ARR inflates the figure and misleads anyone comparing it against a valuation multiple — see the valuation estimator.
GOOD QUESTIONS
Frequently asked
How do I convert ARR to MRR?+
Divide by twelve. $1,000,000 ARR is $83,333 MRR. To go the other way, multiply MRR by twelve.
Is $1M ARR the same as $100K MRR?+
No, and the difference catches people out. $1M ARR is $83,333 MRR. $100K MRR is $1.2M ARR — a 20% larger business. The two milestones are often ranked the wrong way round.
Does ARR mean I earned that much last year?+
No. ARR is a run rate: what you would collect over twelve months at your current rate. A company that grew to $1M ARR during the year collected considerably less than $1M in that year.
Should setup fees count toward ARR?+
No. ARR should include only recurring revenue. One-off implementation and professional services fees are real revenue but not recurring, and including them inflates both the figure and any valuation multiple applied to it.