MRR (monthly recurring revenue) and ARR (annual run rate) are the same underlying number viewed at two different scales: ARR is simply MRR × 12, a projection of what the current monthly rate would add up to over a year if nothing changed. This calculator converts between them and also shows how new, expansion, and churned revenue move next month's number.
How it works
ARR is calculated as MRR × 12. It's a run rate, not a guarantee, since it assumes the current monthly revenue stays flat for a full year.
Net new MRR combines the month's revenue movements: new MRR (from newly acquired customers) plus expansion MRR (upsells to existing customers) minus churned MRR (lost to cancellations and downgrades).
Adding net new MRR to the current MRR projects next month's MRR, which is then annualized the same way to show the projected ARR if that new rate held steady.
A worked example
Starting at $10,000 MRR, with $1,500 in new business, $300 in expansion revenue, and $500 lost to churn: net new MRR is $1,300, bringing next month's MRR to $11,300, a 13.0% month-over-month growth rate, and a projected ARR of $135,600, up from a current $120,000 ARR.
Questions people ask
Why does ARR change even though it's supposedly an annual number?
ARR isn't a fixed 12-month total. It's this month's MRR annualized, recalculated fresh each month. As MRR moves, the run rate moves with it, which is why "current ARR" and "projected ARR" here can differ even though only one month has passed.
What's the difference between new MRR and expansion MRR?
New MRR comes from customers who weren't paying you last month; expansion MRR comes from existing customers paying you more than before (an upgrade, added seats, or a higher tier). Keeping them separate matters because they usually have very different acquisition costs and tell you different things about the business.
Should I count downgrades the same as full cancellations?
Both reduce MRR and both belong in "churned MRR" for this calculator's purposes, since it's tracking the net revenue impact. Many SaaS businesses do track them separately internally (as "contraction MRR" vs. "churned MRR") because they signal different problems: a downgrade suggests partial dissatisfaction or reduced need, while a full cancellation is a complete loss.
How does this relate to the Churn Rate in the SaaS Unit Economics Calculator?
That calculator's churn rate is customer (logo) churn, the share of accounts that cancel. This calculator's "churned MRR" is revenue churn, which can move differently if the customers who churn are larger or smaller than average. Use both together for a fuller picture of retention health.
Guides
- LTV to CAC Ratio Explained, With the Math Behind ItLTV:CAC compares what a customer is worth with what it cost to win them. Here is how each side is calculated and why churn and margin move it so much.
- Percentage Change vs Percentage Points, and Why Losses Are Harder to RecoverA rate going from 4% to 5% rose by 1 percentage point, or by 25%. And a 50% drop needs a 100% rise to recover. Here is the math behind both.
- Why Annualizing Monthly Churn Isn't Just Multiplying by 12A 3% monthly churn rate doesn't compound to 36% a year. It compounds to about 30%. Here's the actual math, and why the difference matters.