Annual recurring revenue (ARR) measures the amount of revenue that a business expects to generate every year on a recurring basis. It is an important metric for subscription-based businesses. If you bill monthly, your ARR is:
ARR = [monthly price of service x 12 months x number of active customers]
If you bill annually, your ARR is:
ARR = [annual price of service x number of active customers]
For example, if your business sells an online subscription for $9.99 per month and you have 145,000 active readers, your ARR would equal roughly $17.4 million:
$9.99 x 12 months x 145,000 = $17,382,600
Why ARR matters
ARR and the related monthly recurring revenue (MRR) metric are critical subscription business metrics for cashflow forecasting and real-time insight into financial health. ARR shows your year-over-year growth at a high level, which is helpful for long-term planning and creating strategic roadmaps. MRR digs deeper, showing you how your business is progressing from month to month. MRR measures the immediate effects of any product or pricing changes, and also helps you track seasonal fluctuations.
The bottom line
Vindicia makes it easy to track ARR, MRR, and other critical metrics. Our subscription intelligence helps you see the truths in your subscription data. Subscription intelligence isn’t a product – it’s part of everything we do. Turn to our dashboard and data warehouse to discover the what’s and why’s of your business:
- Discover: Track your subscription metrics within our dashboard-based portal
- Learn: Work with experts who find insights in your data
- Apply: Turn insights into improved business outcomes
Download our Subscription Metrics eBook to learn more about the top eight metrics that will help your organization achieve subscription business success.
Download our actionable eBook today to learn about the top 8 metrics that will help your organization achieve subscription business success.
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