MRR to ARR Calculator — Normalise a Mixed Billing Book

Background.

Monthly recurring revenue is what your customers are committed to pay you in a normal month for the subscription itself. Annual recurring revenue is that figure times twelve. The multiplication is the easy part; the work is in building a monthly figure when customers pay on different schedules and some of what you invoice will never repeat.

A customer on a $100-a-month plan adds $100 to MRR. Annual contracts worth $600,000 a year add $50,000, one twelfth, because MRR asks what a month of the subscription is worth, not what landed in the bank this month. Quarterly customers billed $30,000 a quarter add $10,000. Put those streams together, with $40,000 of monthly plans, and a business with three billing schedules has a single number it can track from month to month: $100,000 of MRR, or $1,200,000 of ARR.

What stays out matters as much. Implementation projects, onboarding, training, custom development and hardware are revenue, but none of it renews by itself. Andreessen Horowitz's list of sixteen startup metrics says ARR "should exclude one-time (non-recurring) fees and professional service fees", and Bessemer Venture Partners gives the combined figure a separate name, ARRR, annual run-rate revenue. The calculator reports both, so the gap between them is visible: in the example, $12,000 a month of services lifts run-rate revenue to $1,344,000 while ARR stays at $1,200,000.

ARR is an operating metric, not accounting revenue. No accounting standard defines it, two companies can calculate it differently, and the income statement follows rules under which the same contracts produce a different number. It also says nothing about direction: a business with $1.2 million of ARR could be doubling or shrinking. What it gives you is a clean measure of the recurring base on the day you measure it, which every growth, retention and valuation figure then builds on.

What is mrr to arr calculator?

MRR is the monthly value of all committed subscription revenue, with every billing schedule converted to a monthly amount: monthly plans at face value, quarterly billing divided by three, annual contract values divided by twelve. ARR is MRR × 12, the yearly amount the current subscriptions would bring in if nothing changed. Bessemer's definition puts it as "the currently recognized portion of this monthly revenue, multiplied by twelve". Both are run rates: they describe the present book of contracts at today's prices, with no forecast of new sales or losses. Both leave out revenue that must be sold again to recur, such as setup fees, services and usage that no contract commits the customer to. Run-rate revenue puts that non-recurring revenue back in, and its annual version is what Bessemer calls ARRR. The share of total monthly revenue that is recurring is the ratio of the two.

How to use this calculator.

1. 01Enter the total monthly price of every customer on a monthly plan, after discounts. Use the committed subscription price rather than this month's invoices, so a customer who upgraded mid-month counts at the new rate.
2. 02Enter the combined yearly value of all annually billed contracts. For a multi-year deal enter one year's value, not the whole contract: a three-year, $180,000 contract contributes $60,000.
3. 03Enter one quarter's billing summed across every quarterly customer; it is divided by three.
4. 04Enter the monthly average of non-recurring revenue, taken over several months if it is lumpy: implementation, onboarding, training, custom work, hardware and overage no contract commits to. It is kept out of MRR and ARR and shown in the run-rate figures and the recurring share.
5. 05At least one of the three recurring fields must be above zero. Read MRR and ARR first, then the two shares, which show how much of the business is recurring and how much of the recurring base renews once a year.

The formula.

MRR = M + A ÷ 12 + Q ÷ 3, where M is recurring revenue billed monthly, A the combined annual value of annual contracts and Q the combined value of one quarter's billing on quarterly contracts. ARR = MRR × 12. The annual and quarterly contributions are reported separately as MRR from annual contracts and MRR from quarterly contracts.

The non-recurring figure N enters only the run-rate outputs. Monthly run-rate revenue is MRR + N and annual run-rate revenue is (MRR + N) × 12. The recurring share is MRR ÷ (MRR + N) × 100, so it is 100% when you enter no non-recurring revenue. The share of MRR on annual contracts is (A ÷ 12) ÷ MRR × 100.

ARR is twelve times the exact MRR, not the MRR rounded to the cent. A single $100 annual contract shows MRR of $8.33 and ARR of exactly $100.00, rather than the $99.96 that 12 × $8.33 would give. Every result is shown to the cent or to two decimal places of a percent.

The arithmetic assumes the inputs are already clean, and most disagreements about ARR come from what goes into them rather than how they are combined. Three choices change the answer most. A multi-year contract entered at its total value instead of its annual value inflates ARR by the number of years. Services revenue entered as recurring inflates it by twelve times the monthly services figure. And customers counted before they are committed, such as free trials or signed contracts that have not started, turn ARR into a bookings figure. A sensible convention for each, written down and applied the same way every month, matters more than which convention you choose. The same goes for a book billed in several currencies: convert every contract at one fixed exchange rate for the year, so that currency swings do not show up as growth or churn.

The formula has no time dimension. It ignores when contracts renew, whether customers are about to leave and how fast new ones arrive, and it treats a contract signed yesterday the same as one in its fifth year. Those questions need the flows into and out of the base, not its size.

A worked example.

Frequently asked questions.

References& sources.

1. [1]Jordan, J., Hariharan, A., Chen, F., & Kasireddy, P. (21 August 2015). "16 Startup Metrics." Andreessen Horowitz. Quoted verbatim on this page: ARR "should exclude one-time (non-recurring) fees and professional service fees", and the two classic errors of counting non-recurring fees and counting bookings. Retrieved 29 July 2026; quotes verified against the live page.
2. [2]Deeter, B. (2 October 2012). "The five accounting metrics for cloud companies." Bessemer Venture Partners Atlas. Independent second authority on the recurring/non-recurring boundary: "ARR is simply the currently recognized portion of this monthly revenue, multiplied by twelve" and "ARRR is the ARR, plus any non-recurring revenue related to items such as professional services, transactions, and implementations". Also the source for CMRR. Retrieved 29 July 2026; quotes verified against the live page.
3. [3]Financial Accounting Standards Board (May 2014). Accounting Standards Update No. 2014-09, "Revenue from Contracts with Customers (Topic 606)." Source for the point that a subscription is a performance obligation satisfied over time and recognised ratably (ASC 606-10-25-27), which is why ARR is not GAAP revenue. Authoritative PDF; URL verified live (HTTP 200) 29 July 2026.
4. [4]U.S. Securities and Exchange Commission (30 January 2020). Release No. 33-10751, "Commission Guidance on Management's Discussion and Analysis of Financial Condition and Results of Operations." Requires a registrant presenting a metric such as ARR to disclose its definition, method of calculation, why it is useful and how management uses it, and to flag material changes in the calculation. Effective 25 February 2020. sec.gov returns HTTP 403 to automated fetchers; release number, title and dates verified independently.
5. [5]Hsu, J. "Diligence at Social Capital Part 2: Accounting for Revenue Growth." Source for the growth-accounting decomposition of recurring revenue into new, resurrected, expansion, contraction and churned components — the framework that separates the size of the recurring base from its direction of travel. Retrieved 29 July 2026.
6. [6]17 CFR § 229.303 (Regulation S-K Item 303, Management's Discussion and Analysis). Context for how operating metrics are presented alongside GAAP results in periodic reports. Text verified 29 July 2026 via the Cornell LII mirror of the eCFR.