SaaS metrics
ARR
Also called Annual recurring revenue.
ARR, or annual recurring revenue, is the money your subscriptions bring in over one year, if nothing changes.
The simple way to find it: take your MRR and multiply by 12. It counts only repeating subscription money, not one-time setup fees or services. Companies that sell yearly plans often report ARR. Companies with monthly plans often report MRR.
With two customers, ARR is a small number, and that is fine. Track MRR every month, and use ARR when you talk about yearly contracts. Watch churn rate next to it, because every lost customer lowers ARR. Your pricing and lifetime value move it too.
Go deeper
- How to price a SaaS productSaaSPrice your SaaS product when you have almost no customers: set one price from what the problem costs your buyer, what 10 alternatives charge and what one customer costs you, ask about it in every chat, and raise it after 30 price talks if fewer than 1 in 5 say it is too expensive.
- How to reduce SaaS churnSaaSComing soon
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