Glossary
What is ARR?
ARR, or annual recurring revenue, is the yearly value of your active subscriptions. For most small businesses it is simply MRR times twelve.
The short definition
ARR answers: if nothing changed, how much recurring revenue would we earn over a year? The usual calculation is MRR × 12. A product with $2,000 MRR has $24,000 ARR.
Like MRR, it excludes one-off payments, services and setup fees. It is a run rate, not a forecast.
When to use ARR or MRR
ARR is common for businesses that sell mostly yearly contracts, and in fundraising, where bigger numbers and annual planning are the norm.
MRR is clearer for most indie products with monthly plans, because it moves visibly month to month. A $300 change in MRR is easy to feel. The same change in ARR, $3,600, can sound inflated to an indie audience.
Whichever you use, say which, and do not mix them in one update.
Common mistakes
- Annualizing a good month of one-off sales. That is a revenue run rate, not ARR.
- Counting signed but unstarted contracts. Some companies call that contracted ARR; label it if you use it.
- Ignoring churn. ARR is a snapshot. If customers are leaving fast, next year's revenue will be lower.
On makerhandle
makerhandle shows MRR, verified from Stripe, or the last 30 days of sales for products without subscriptions. That keeps every page and the leaderboard comparable. If you want to mention ARR, put it in your bio. See verified revenue.
Questions
How do you calculate ARR?
Usually MRR multiplied by twelve, counting only recurring subscription revenue.
Is ARR the same as annual revenue?
No. Annual revenue includes everything you earned in a year. ARR is the yearly value of current recurring subscriptions.
Should an indie product report ARR or MRR?
MRR is usually clearer for monthly plans. Use ARR if most customers pay yearly.
Does makerhandle show ARR?
No. It shows MRR or the last 30 days of sales, so every page is comparable.
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