📊 SaaS Subscription MRR & ARR Calculator
Calculate software-as-a-service Monthly Recurring Revenue (MRR), Annual Recurring Revenue (ARR), logo churn rate, and Customer Lifetime Value (LTV).
Revenue minus hosting, support and delivery costs. Typical SaaS runs 70–85%.
Share of customers who cancel each month.
Upgrades and seat growth from existing customers, as a share of MRR.
Fully loaded sales and marketing spend divided by new customers.
This month’s MRR movement
Without the gross-margin adjustment this would read $1,400 — the figure most calculators show. The difference is $308, and it is the cost of actually serving the customer. Using revenue rather than margin makes every LTV:CAC ratio look better than it is.
The lifetime figures assume a constant churn rate, which no real cohort has — churn is almost always highest in the first weeks and falls as customers settle, so a single average both understates the risk early and overstates it later. Treat LTV as a planning number rather than a measurement, and check it against actual cohort revenue once you have a year of data.
What SaaS Subscription MRR & ARR Calculator Does
MRR is customers times what they pay each month, and ARR is that times twelve. Both are simple; both are routinely reported wrong. ARR is not last year's revenue — it is the annualized run rate of what is recurring right now, which means a company can have $3M ARR and $1.8M in actual receipts for the year just ended.
The metric that matters more than either is net revenue retention: what last year's customers are worth this year, after churn and after expansion. Above 100% means the existing base grows without a single new signup, which is the closest thing SaaS has to a compounding machine. Below 100% means every new sale is partly refilling a leaking bucket.
Lifetime value is where the common error sits. The standard formula is ARPU times gross margin divided by churn — and most calculators drop the gross margin. At a 78% margin that overstates LTV by 28%, and since LTV feeds straight into the LTV:CAC ratio people use to justify spending more on acquisition, the error runs in the dangerous direction.
One honest caveat on all the lifetime numbers: they assume churn is constant, and it never is. Churn is highest in the first weeks and settles as customers embed, so a single average both understates early risk and overstates the tail.
How to Use SaaS Subscription MRR & ARR Calculator
- Enter active paying subscribers and ARPU ($ / user / month)
- Input monthly logo churn percentage and new monthly signups
- Review total ARR, MRR, Customer LTV, and net monthly growth velocity
Formula Used by SaaS Subscription MRR & ARR Calculator
The core metrics
MRR = customers × ARPU · ARR = MRR × 12 · NRR = (1 − churn + expansion) × 100 · LTV = (ARPU × gross margin) ÷ churn · payback = CAC ÷ (ARPU × gross margin)
- gross margin
- revenue minus the cost of serving it — hosting, support, payment fees. Typically 70–85% in SaaS
- churn
- the monthly rate at which customers or revenue leave
- NRR
- measured on the existing base only; new customers are deliberately excluded
Worked example
500 customers at $49, 78% gross margin, 3.5% monthly churn, 1.2% expansion, $600 CAC.
- MRR = 500 × 49 = $24,500; ARR = $294,000
- NRR = (1 − 0.035 + 0.012) × 100 = 97.7%
- LTV = (49 × 0.78) ÷ 0.035 = $1,092
- Without the margin adjustment: 49 ÷ 0.035 = $1,400
- CAC payback = 600 ÷ (49 × 0.78) = 15.7 months
Result: LTV:CAC of 1.82 — well under the 3:1 rule of thumb. The unadjusted figure would have shown 2.33 and looked merely weak rather than unviable.
Reading net revenue retention
Existing customers only. This is the number investors ask about first.
| NRR | What it means |
|---|---|
| Above 120% | Best in class — the base alone grows 20%+ a year |
| 110–120% | Strong; expansion clearly outruns churn |
| 100–110% | Healthy — the base holds its value or better |
| 90–100% | Leaky; all growth has to come from new sales |
| Below 90% | Losing ground faster than most teams can sell |
What the margin correction does to LTV
ARPU $49, 3.5% monthly churn. The overstatement is the reciprocal of the margin.
| Gross margin | Correct LTV | Without the adjustment | Overstated by |
|---|---|---|---|
| 90% | $1,260 | $1,400 | 11% |
| 78% | $1,092 | $1,400 | 28% |
| 70% | $980 | $1,400 | 43% |
| 50% | $700 | $1,400 | 100% |
Churn and how long a customer lasts
Average lifetime is 1 ÷ monthly churn.
| Monthly churn | Annual equivalent | Average lifetime |
|---|---|---|
| 0.5% | 5.8% | 200 months |
| 1% | 11.4% | 100 months |
| 2% | 21.5% | 50 months |
| 3.5% | 34.8% | 29 months |
| 5% | 46.0% | 20 months |
How to Read Your Result
ARR is a run rate, not revenue
It answers "if nothing changed, what would the next twelve months bring". It is not what you billed last year, and the two diverge sharply in a fast-growing or fast-shrinking business. Reporting one as the other is the most common SaaS metric error after the LTV margin.
Logo churn and revenue churn are different questions
Losing 5% of customers who were your smallest accounts is not the same as losing 5% of revenue. Revenue churn is what NRR is built on; logo churn is what predicts support load and lifetime. Track both, and expect them to disagree.
Payback period constrains growth more than LTV:CAC does
A 3:1 ratio with an 18-month payback still means you fund every customer for a year and a half before breaking even. That is a cash-flow problem regardless of how good the ratio looks — most healthy SaaS aims for payback under 12 months.
Discounts and annual prepay distort ARPU
Annual contracts paid up front are usually discounted, so booking them at list inflates ARPU while the cash says otherwise. Normalize to what you actually collect per month before any of these numbers mean anything.
Limitations & Accuracy Notes
- Assumes a constant churn rate. Real churn is front-loaded, so lifetime and LTV are both approximations.
- Treats every customer as identical at ARPU; a business with a wide price range needs the calculation done per segment.
- Expansion and contraction are entered as a single net figure, not modeled separately.
- No discounting for the time value of money, which matters when average lifetimes run to several years.
- Gross margin should be the true cost of serving customers, and many teams underestimate it by leaving out support and payment processing.
Frequently Asked Questions
What is the difference between MRR and ARR?
How is Customer Lifetime Value (LTV) calculated in SaaS?
Is ARR the same as annual revenue?
What should not be counted in MRR?
How should annual contracts be handled?
What is net revenue retention?
What is the difference between logo churn and revenue churn?
Is my revenue data stored?
References & Further Reading
- Growth Equity Interview Guide — SaaS LTV — States LTV as ARPU × gross margin ÷ churn, the formula used here