How to use the MRR and ARR calculator
The calculator has three tools.
MRR adds up recurring revenue from your plans:
- Enter one row per plan with the monthly price customers actually pay after discounts, and the number of paying customers.
- Convert annual plans to a monthly figure by dividing the yearly price by 12. Do the same for multi-year deals over their full term.
- Leave out free plans and one-time fees. Add rows for add-ons that bill every month.
MRR movement explains one month’s change. Enter starting MRR and the five movements: new, expansion, reactivation, contraction and churned. Your billing or subscription analytics system usually reports these directly.
Projection runs MRR forward for 24 months from today’s MRR, the new MRR you add each month, how fast that amount grows, and the share of existing MRR lost each month.
How MRR and ARR are calculated
ARR = MRR × 12
ARPA = MRR ÷ Paying customersMonthly price is the monthly equivalent after discounts: an annual contract counts as its yearly value ÷ 12. ARPA is average revenue per account.
Net new MRR = Ending MRR − Starting MRR
Quick ratio = (New + Expansion) ÷ (Contraction + Churned)
A worked example
MRR and ARR. Company C, a fictional software business, has four plans. Adding price × customers across them gives MRR of $48,195.00 and ARR of $578,340. Across 705 paying customers, ARPA is $68.36. The Growth monthly plan is the largest, with 37.0% of MRR.
Movement. In one month MRR goes from $45,000 to $48,600.00. New customers add $4,200, expansion $1,500 and reactivations $300, while downgrades take away $600 and cancellations $1,800. Net new MRR is $3,600, growth of 8.0%, and the quick ratio is 2.38.
Projection. Starting from $50,000 and adding $5,000 of new MRR a month, growing 3% a month, with 2.5% monthly churn, MRR reaches $99,424 in a year and $162,519 in two years, an ARR of $1,950,224.
Annual plans: the most common MRR mistake
Customers on annual plans often pay the whole year up front. That cash is welcome, but it is not monthly recurring revenue. If the 60 annual Growth customers in the example are entered at their yearly price of $948 instead of the monthly $79, MRR jumps from $48,195.00 to $100,335.00 and ARR from $578,340 to $1,204,020. Investors who check MRR against bank deposits or reported revenue will spot the gap quickly.
The same logic applies in reverse: a customer who pays monthly on a two-year contract still contributes only one month’s price to MRR. Contract length affects how predictable revenue is, not its monthly size.
Reading MRR movement and the quick ratio
Ending MRR alone hides how hard the business worked to get there. Two companies can both add $3,600 of net new MRR, one by adding $4,000 and losing $400, the other by adding $10,000 and losing $6,400. The second has a much leakier base and depends on ever-larger sales to stand still.
The quick ratio captures this in one number. In the example, every dollar lost is replaced by $2.38 of new and expansion MRR. A ratio of 4 or more is often cited as strong for early-stage SaaS, but it varies by stage and segment: mature businesses with a large base naturally lose more MRR in absolute terms and tend to show lower ratios even when they are healthy.
In a weaker month, with new MRR of $1,500, expansion of $600, contraction of $900 and churn of $2,700, the quick ratio falls to 0.58 and MRR shrinks to $43,500.00. Once the ratio is below 1, growth has stopped.
Why churn caps MRR growth
Churn is a percentage of a growing base, while new MRR is a fixed amount unless the sales engine grows with it. That combination sets a ceiling:
| Assumption | MRR in month 12 | MRR in month 24 |
|---|---|---|
| New MRR flat at $5,000, 2.5% churn | $89,300 | $118,304 |
| New MRR +3% a month, 2.5% churn (the example) | $99,424 | $162,519 |
| New MRR +3% a month, 1.5% churn | $107,443 | $183,346 |
| New MRR +3% a month, 4% churn | $88,711 | $137,155 |
With new MRR flat at $5,000 and 2.5% churn, MRR can never pass $200,000, the point where monthly churn equals monthly new MRR. Growing past it requires either more new MRR each month or less churn. Lowering churn from 4% to 1.5% lifts month-24 MRR from $137,155 to $183,346 with the same sales effort, and the gap keeps widening after the chart ends.
What this calculator does not include
- Revenue recognition. MRR and ARR are operating metrics, not accounting revenue under GAAP or IFRS.
- Usage and overage fees. Only include them if they recur reliably; the calculator treats every row as fixed.
- Currency. Enter all prices in one currency. Mixed-currency MRR moves with exchange rates.
- Seasonality and step changes. The projection uses constant monthly rates; price increases or large contracts need to be added by hand.
- Expansion in the projection. Use a churn rate net of expansion if you want expansion counted, or add expected expansion to the new MRR figure.