ARR Growth Calculator

ARR is calculated by multiplying your Monthly Recurring Revenue (MRR) by 12. MRR includes all recurring subscription revenue normalized to a monthly figure. For example, if you have 200 customers paying $500/month, your MRR is $100,000 and your ARR is $1,200,000. ARR should only include committed, recurring revenue — one-time fees, professional services, and variable usage charges are typically excluded unless they are contractually recurring.

MRR (Monthly Recurring Revenue) is the total recurring revenue normalized to a monthly figure. ARR (Annual Recurring Revenue) is MRR multiplied by 12. MRR is better for tracking short-term trends, month-over-month growth, and identifying churn patterns. ARR is better for high-level planning, fundraising conversations, and comparing against annual benchmarks. VCs typically talk in terms of ARR when evaluating companies ($1M ARR, $10M ARR milestones), while operators use MRR for day-to-day management.

For seed-stage companies, VCs look for 10-20% month-over-month MRR growth, which translates to roughly 3-9x annual growth. For Series A, the benchmark is typically $1-2M ARR growing at 2-3x year-over-year. The gold standard framework is T2D3 (Triple, Triple, Double, Double, Double) — meaning a company should triple revenue for two years, then double for three years, going from roughly $2M to $6M to $18M to $36M to $72M to $144M ARR.

ARR only counts recurring, subscription-based revenue — the predictable income a company can count on each year. Total revenue includes everything: one-time setup fees, professional services, hardware sales, and any non-recurring income. A company might have $5M in total revenue but only $3M in ARR if $2M comes from one-time implementation projects. VCs value ARR more highly than total revenue because it is predictable, has higher margins, and compounds over time with net retention.