4 ms·

I'd be cautious multiplying your MRR x 12 to establish ARR. Things like seasonality or promotions could overestimate your ARR by using inflated subscription num

I'd be cautious multiplying your MRR x 12 to establish ARR. Things like seasonality or promotions could overestimate your ARR by using inflated subscription numbers. Additionally, if customers are not contractually obligated to stick around for a year, that calculation may not account for month-to-month churn.

ezekg 6y ago
I’m pretty comfortable with MRRx12 for annual run rate, which is pretty normal from what I’ve seen. But I do have other unmentioned revenue forecasting metrics based on current/past growth/churn rate, which I pay more attention to than my ARR. I don’t base a lot on this number either way.
encoderer 6y ago
ARR is always MRRx12. You're talking about a revenue model.
- jasongill 6y ago
  I think the confusion here stems from the terms "annual run rate" and "annual recurring revenue" sharing the same acronym
  - encoderer 6y ago
    I admit it’s confusing, but those are exactly the same thing. Have the same formulas. https://www-priceintelligently-com.cdn.ampproject.org/i/s/www.priceintelligently.com/hs-fs/hubfs/Calculating%20True%20MRR.jpg?width=1511&name=Calculating%20True%20MRR.jpg https://www-priceintelligently-com.cdn.ampproject.org/i/s/ww... https://www-profitwell-com.cdn.ampproject.org/i/s/www.profitwell.com/hs-fs/hubfs/blob-256.png?width=1200&name=blob-256.png https://www-profitwell-com.cdn.ampproject.org/i/s/www.profit...
- thih9 6y ago
  > ARR is always MRRx12. Are you saying that ARR is meaningless for heavily seasonal businesses?
  - santiagobasulto 6y ago
    not meaningless, but it is well understood that ARR=MRRx12, so if there's a heavily seasonal business with a big percentage of monthly users, ARR is known to be skewed. In those cases I'd look for YoY growth with prev year.