What is ARR?
Annual Recurring Revenue (ARR) is one of the more important metrics for a subscription business. It represents the annualized revenue for your subscriptions.
How to calculate ARR
Yearly subscriptions are easy enough to calculate. If you sign up a customer for $1,200 for 12 months of service then that represents $1,200 of ARR.
If you sign a $150/month subscription then that represents $1,800 in ARR ($150 x 12).
Say you have a customer that has subscribed to two different products. One for $100/month and the other for $200/month. The customer’s total ARR would be $3,600.