ARR and MRR measure the same thing — recurring revenue — at different time horizons. Choosing which to report depends on your business model and audience.
When to use MRR
Use MRR when: - Your billing cycle is monthly - You are tracking short-term growth momentum - You want to see the impact of churn or expansion within 30 days - You are in early stage (MRR < $100k) where monthly changes are meaningful
When to use ARR
Use ARR when: - You have annual contracts or significant mix of annual billing - Reporting to investors (VCs and PE firms use ARR as the standard) - You are above $1M MRR (ARR communication is cleaner: "$12M ARR") - You want to compare to public SaaS benchmarks (all use ARR)
The conversion
ARR = MRR × 12. Simple — but only valid if your subscription base is stable. If you have high monthly churn, ARR is a misleading forward projection.
What to include in ARR/MRR
Include: recurring subscription revenue (monthly and annual) Exclude: one-time setup fees, professional services, variable usage above a committed floor, discounts applied at the invoice level
Convert between the two instantly with the ARR ↔ MRR converter.