Annual recurring revenue (ARR)
The value of an agency's recurring revenue expressed over a year - essentially MRR multiplied by twelve. A headline measure of the recurring book.
For example, an agency with $35,000 in MRR has $420,000 in ARR. Quoting the annual figure makes the size of the recurring book obvious to the owner, a lender or a buyer in a way a monthly number sometimes does not.
Why it matters to agencies: ARR is the number investors and buyers anchor on when they value an agency, because recurring revenue is worth far more than one-off project income. Tracking ARR keeps the focus on building a durable, sellable book rather than chasing the next project.
ARR is simply MRR x 12 - only count genuinely recurring revenue (retainers, subscriptions), not one-off projects, or it overstates the business.
ARR = MRR × 12
Counts only recurring revenue - exclude one-off project fees.
ARR calculator
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- Annualising one-off or project revenue as if it recurs.
- Counting bookings or pipeline as ARR.
- Ignoring churn, so reported ARR drifts from reality.
What is annual recurring revenue (ARR)?
The value of an agency's recurring revenue expressed over a year - essentially MRR multiplied by twelve. A headline measure of the recurring book.
What is the difference between ARR and MRR?
ARR is the annual view and MRR the monthly view of the same recurring revenue - ARR is simply MRR multiplied by twelve.
Does ARR include one-off project fees?
No - ARR counts only recurring revenue from retainers and subscriptions; one-off projects are tracked separately.
Why do buyers care about ARR?
Recurring revenue is predictable, so a high, growing ARR makes an agency more valuable and easier to sell than one living on one-off projects.