Revenue & Sales
Basic

Annual Recurring Revenue

Annual recurring revenue annualises the monthly recurring revenue of a subscription business.

Formula

ARR=MRR×12ARR = MRR \times 12

Variables

ARRAnnual recurring revenue
MRRMonthly recurring revenue

Example

$15,000 MRR: ARR = $180,000

Did You Know?

ARR is the headline number in SaaS valuations — companies are often priced at a multiple of it.

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Total Revenue

Basic

Total revenue is the selling price multiplied by the number of units sold.

Net Revenue

Basic

Net revenue is gross revenue less returns, refunds and discounts — the amount actually recognised.

Average Revenue

Basic

Average revenue is total revenue divided by units sold — equal to price per unit in a single-price market.

Marginal Revenue

Intermediate

Marginal revenue is the extra revenue earned from selling one additional unit.

Revenue Growth Rate

Basic

The percentage change in revenue from one period to the next.

Monthly Recurring Revenue

Intermediate

Monthly recurring revenue is the number of active subscribers times average revenue per user per month.