Accounting Annual Recurring Revenue (Per-Unit) Calculator
Calculate annual recurring revenue per unit and total ARR from your recurring price, billing periods, active units and discounts.
Overview
This Accounting Annual Recurring Revenue (Per-Unit) Calculator estimates the annual recurring revenue generated by one active unit and by all active units combined. Enter the recurring unit price, number of billing periods in a year, active units and any average discount to annualize your recurring revenue.
How it works
The calculator first reduces the listed recurring unit price by the average discount rate. It then multiplies the net unit price by the number of billing periods per year to calculate ARR per unit. Finally, it multiplies ARR per unit by the number of active units to estimate total ARR. This is an annualized recurring revenue measure, not necessarily revenue recognized in financial statements.
How to use this calculator
- 1Enter the recurring price charged for one unit before discounts.
- 2Enter the number of billing periods in a year, such as 12 for monthly billing.
- 3Add the number of active units currently generating recurring revenue.
- 4Enter the average discount rate applied to the recurring price.
- 5Review the ARR per unit and total ARR estimates.
Example Calculation
Recurring price per unit
$50
Billing periods per year
12
Active recurring units
100
Average discount rate
10%
ARR per unit
$540.00
A $50 monthly unit price with a 10% average discount produces $540 ARR per unit. With 100 active units, estimated total ARR is $54,000 per year.
Frequently asked questions
What is ARR per unit?
ARR per unit is the annualized recurring revenue generated by one active, recurring unit after recurring discounts are applied.
How do I calculate ARR from a monthly unit price?
Multiply the net monthly price per unit by 12. Then multiply that result by the number of active units to estimate total ARR.
Should one-time setup fees be included in ARR?
No. ARR is generally intended to measure recurring revenue, so one-time implementation, setup and similar non-recurring fees are normally excluded.
Does ARR equal revenue recognized in the accounts?
Not necessarily. ARR annualizes recurring contract value, while recognized revenue can depend on service delivery, contract timing, refunds and accounting policies.
How should discounts be handled in ARR?
Use the average recurring discount that reduces the ongoing unit price. Temporary or one-time discounts may need separate treatment depending on your reporting approach.
What billing periods per year should I use?
Use 12 for monthly billing, 4 for quarterly billing, 2 for semiannual billing and 1 for annual billing.
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Assumptions and warnings
Assumptions
- All entered units remain active and billable for a full year.
- The recurring price, billing frequency and average discount remain unchanged throughout the year.
- The calculation annualizes recurring charges only and excludes one-time fees, usage charges, taxes, refunds and bad debt.
- Results are estimates based on the inputs provided.
Warnings
- This calculator provides an estimate only and is not accounting, tax or financial advice.
- Recognized revenue may differ from ARR because of contract terms, cancellations, refunds and applicable accounting policies.