How this number is made
Monthly recurring revenue is the customers times the price they pay every month. Annual recurring revenue, in the startup sense, is that month times 12. It is not revenue you have already booked. One-time fees, usage overages, and customers who will cancel are not in the formula.
- Leave out setup fees. They are not recurring.
- If prices differ, type the average price, or the total MRR directly by setting customers to 1 and price to the MRR.
Formula
MRR = customers × monthly price. ARR = MRR × 12.
Worked example
With the figures already in the form, annual run rate is $70,560.
Questions
Is ARR the same as this year’s revenue?
Only if every current customer pays for twelve months and you add nobody and lose nobody. It is a run rate.
Where do annual plans go?
Divide the annual price by 12 and count the customer. Do not put the whole year in the monthly price.