ARR Calculator — Annual Recurring Revenue for SaaS and Subscriptions
Calculate your Annual Recurring Revenue (ARR) from subscriptions. Understand ARR growth, breakdown, and why it's the north star metric for SaaS.
ARR is the number that shows up in every SaaS funding announcement and valuation conversation. "We're at $2M ARR" means something specific — it's the annualized run rate of your recurring subscription revenue. Use the CalcHub ARR Calculator to get your ARR from either monthly figures or contract-level data.
Two Ways to Calculate ARR
Method 1: From MRR ARR = MRR × 12If your MRR is ₹8,50,000, your ARR = ₹1,02,00,000 (₹1.02 crore / ~$122K)
Method 2: From Active Contracts Sum the annualized value of every active subscription, regardless of billing frequency.A customer on ₹1,499/month: contributes ₹17,988 to ARR
A customer on ₹89,940/year: contributes ₹89,940 to ARR
A customer on ₹4,49,820 for 3 years: contributes ₹1,49,940/year to ARR
How to Use the Calculator
- Enter monthly recurring revenue (auto-multiplies by 12), or
- Enter contract details for multiple customer tiers and billing cycles
- Get ARR, MRR, and projected ARR at current growth rate
ARR Milestones and What They Mean
| ARR Milestone | Common Stage | Typical Investor Interest |
|---|---|---|
| ₹0–50L | Pre-seed / seed | Angels, pre-seed funds |
| ₹50L–2Cr | Seed / Pre-A | Seed funds, some Series A |
| ₹2Cr–10Cr | Series A territory | Tier 2 VCs |
| ₹10Cr–50Cr | Series B territory | Top-tier VCs |
| ₹50Cr+ | Growth stage | Late-stage growth equity |
ARR Growth Rate Benchmarks
The "rule of 40" and "T2D3" framework are common ARR health checks:
Rule of 40: ARR growth rate % + profit margin % should exceed 40. A company growing 60% YoY with -20% margins scores 40 — borderline. Growing 30% with 15% margins also scores 45. T2D3 (Triple-Triple-Double-Double-Double): A growth path from $1M ARR to $100M in 5 years if you triple twice then double three times. This was the benchmark for top-tier SaaS in the US; expectations vary by market.What Counts in ARR (and What Doesn't)
Counts:- Monthly subscriptions (× 12)
- Annual contracts
- Multi-year contracts (annualized)
- Committed license fees
- One-time setup or implementation fees
- Professional services / consulting
- Variable usage fees (unless there's a committed minimum)
- Trial periods not yet converted
ARR vs Run Rate Revenue
ARR is often confused with "revenue run rate." Run rate = last month's total revenue × 12. ARR is only the recurring subscription portion × 12. For a pure-play SaaS with no professional services, they're the same. For hybrid businesses, they diverge significantly.
How quickly should a SaaS company grow ARR?
Benchmarks depend on stage. Pre-product-market-fit startups often grow ARR sporadically. Post-PMF, top-quartile SaaS companies grow ARR 100%+ YoY in the first few years. After $10M ARR, 60–80% YoY growth is still considered excellent. Growth rates naturally compress as ARR scales.
Is ARR or MRR more useful for B2B vs B2C SaaS?
B2B SaaS with longer sales cycles and annual contracts typically uses ARR — contracts are large, lumpy, and annual billing makes monthly tracking noisy. B2C SaaS with monthly subscriptions and high volume uses MRR because monthly fluctuations are meaningful and real-time. Use whichever matches your billing cadence.
How does ARR affect SaaS valuation?
SaaS companies are often valued at a multiple of ARR, not earnings. Multiples range from 3–5x ARR for slower-growing companies to 15–25x for hypergrowth in strong markets. The multiple depends on growth rate, net revenue retention, gross margin, and competitive moat. Higher ARR growth = higher multiple, usually nonlinearly.