MRR and ARR describe the same recurring revenue at different time scales, but founders constantly mix them up with one-time contract values — and report numbers they later have to correct. Here's the clean distinction.
MRR (Monthly Recurring Revenue) is your normalized monthly recurring base. ARR (Annual Recurring Revenue) is simply MRR × 12. They are two views of one quantity. If your MRR is $40,000, your ARR is $480,000. Nothing more complicated than that.
ARR is not the total value of annual contracts you signed this year, and it's not bookings. If you sign a $24,000 annual deal, that adds $2,000 to MRR and $24,000 to ARR — but it doesn't mean your ARR is now "$24,000 of new business this month." ARR is a snapshot of the run-rate, not a sum of contract values over a period. Confusing run-rate ARR with annual bookings is the most common reporting error in SaaS.
Whichever you headline, both rest on a correctly computed recurring base: annual plans normalized to monthly, one-time fees excluded, real discounts applied. Get the base right and MRR and ARR are just a ×12 apart. Get it wrong — count a $24k annual deal as a $24k MRR spike — and both numbers lie.
The template we recommend computes the normalized recurring base once and shows both MRR and ARR, so you report the right figure for the right audience without double-counting annual contracts.
ARR is simply MRR × 12 — the same recurring revenue base viewed annually instead of monthly. If MRR is $40,000, ARR is $480,000.
No. ARR is a snapshot of your recurring run-rate, not the sum of annual contract values signed in a period. Confusing the two is the most common SaaS reporting error.
Use MRR for monthly-billed, high-velocity SMB businesses and operational reviews; use ARR for annual-contract enterprise businesses and fundraising, where investors benchmark in ARR.
Page built 2026-06-14 from public, dated buying-intent signals. Updated as new signals land.