Accounting Monthly Recurring Revenue (Annual) Calculator
Calculate annual recurring revenue from your current monthly recurring revenue, new subscriptions, expansion, contraction, and churn.
Overview
Use this accounting monthly recurring revenue calculator to annualize your subscription revenue. Enter beginning MRR and the month’s new business, upgrades, downgrades, and cancellations to estimate ending MRR, annual recurring revenue, and net revenue retention.
How it works
The calculator starts with beginning monthly recurring revenue (MRR). It adds new MRR and expansion MRR, then subtracts contraction MRR and churned MRR to find ending MRR. Annual recurring revenue (ARR) is ending MRR multiplied by 12. Net revenue retention compares revenue retained from the starting customer base, including expansions and excluding new customer MRR, with beginning MRR.
How to use this calculator
- 1Enter your recurring subscription revenue at the start of the month.
- 2Add MRR gained from newly acquired customers.
- 3Enter expansion MRR from upgrades or add-ons by current customers.
- 4Record MRR lost through downgrades and customer cancellations.
- 5Review ending MRR, annualized recurring revenue, and retention results.
Example Calculation
Beginning monthly recurring revenue
$10,000
New monthly recurring revenue
$1,500
Expansion monthly recurring revenue
$500
Contraction monthly recurring revenue
$250
Churned monthly recurring revenue
$750
Annual recurring revenue
$132,000
Beginning with $10,000 in MRR, the business ends the month with $11,000 in MRR. This annualizes to $132,000 in ARR, with net revenue retention of 95.0%.
Frequently asked questions
What is monthly recurring revenue (MRR)?
MRR is predictable subscription revenue earned each month from active recurring customer agreements. It commonly excludes one-time charges and non-recurring services.
How is annual recurring revenue calculated from MRR?
For a simple annualized estimate, ARR equals monthly recurring revenue multiplied by 12. This calculator uses ending MRR for that annualization.
What is included in expansion MRR?
Expansion MRR includes extra recurring revenue from existing customers, such as plan upgrades, additional seats, add-ons, or increased committed usage.
What is the difference between contraction and churned MRR?
Contraction MRR is revenue lost when a customer remains but pays less. Churned MRR is revenue lost when a customer cancels completely.
Why is new MRR excluded from net revenue retention?
Net revenue retention measures how well revenue from the starting customer base is retained and expanded. New MRR comes from new customers, so it is excluded.
Is ARR the same as recognized revenue?
Not necessarily. ARR is an annualized run-rate measure, while recognized revenue depends on accounting policies, delivery obligations, contract timing, and other factors.
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Assumptions and warnings
Assumptions
- Annual recurring revenue is calculated by multiplying ending monthly recurring revenue by 12.
- All entered amounts represent recurring subscription revenue, not one-time fees, setup charges, or usage revenue that is not recurring.
- New MRR is excluded from net revenue retention because that metric measures revenue retained from existing customers.
- Results are estimates based on the revenue movements entered for one month.
Warnings
- This calculator provides an accounting estimate only and is not financial or accounting advice.
- Revenue recognition policies, contract terms, refunds, and non-recurring charges may affect reported financial results.