What is ARR (Annual Recurring Revenue)?
The predictable revenue your business earns per year from active subscriptions, typically MRR multiplied by 12.
Why It Matters
ARR is the standard metric investors and stakeholders use to evaluate the size and growth of subscription businesses.
Real-World Example
A company with $10,000 MRR has $120,000 ARR.
“Understanding terms like ARR (Annual Recurring Revenue) matters because it helps you have better conversations with developers and make smarter decisions about your software. You do not need to be technical. You just need to know enough to ask the right questions.”
Related Terms
MRR (Monthly Recurring Revenue)
The predictable revenue your business earns each month from active subscriptions.
SaaS
Software as a Service - applications you access online and pay for through subscriptions
LTV (Lifetime Value)
The total revenue you can expect from a single customer over the entire time they remain a customer.
Learn More at buildDay Melbourne
Want to understand these concepts hands-on? Join our one-day workshop and build a real web application from scratch.
Related Terms
SaaS
Software as a Service - applications you access online and pay for through subscriptions
LTV (Lifetime Value)
The total revenue you can expect from a single customer over the entire time they remain a customer.
MRR (Monthly Recurring Revenue)
The predictable revenue your business earns each month from active subscriptions.
Product-Market Fit
The point where your product satisfies a strong market demand and customers actively want it.
Lean Startup
A methodology for building businesses by rapidly testing ideas with real customers and iterating based on feedback.
User Experience (UX)
The overall experience a person has when using a product, including how easy and pleasant it is to use.