SaaS MRR / ARR & Churn Calculator

For SaaS (Software-as-a-Service) businesses, understanding your recurring revenue and churn metrics is not just important—it's essential for survival and growth. Unlike traditional businesses that rely on one-time sales, subscription businesses live and die by their ability to retain customers and grow revenue predictably month over month. Whether you're a startup founder seeking investment, a finance professional forecasting revenue, or a student studying SaaS business models, mastering MRR, ARR, and churn calculations will give you the analytical foundation to make smart decisions.

Monthly Recurring Revenue (MRR) represents the heartbeat of a subscription business. It tells you exactly how much predictable revenue flows in each month from active subscriptions—excluding one-time fees, setup costs, or variable charges. Annual Recurring Revenue (ARR) scales this monthly figure to an annual perspective, which is particularly useful for enterprise SaaS companies with annual contracts and for investor communications.

Churn—the rate at which customers cancel or reduce their subscriptions—is often called the "silent killer" of SaaS companies. Even a seemingly small monthly churn rate of 3% compounds dramatically over time, potentially wiping out 31% of your customer base annually. This calculator helps you understand both revenue churn (MRR lost) and logo churn (customers lost), along with the critical Net Revenue Retention metric that reveals whether you're truly growing your existing customer value.

Our SaaS MRR/ARR & Churn Calculator empowers you to input your current metrics, model different scenarios, and project your revenue trajectory over time. By visualizing how new customer acquisition, expansion revenue, and churn interact, you'll gain insights that drive better strategic decisions for your subscription business.

What is Monthly Recurring Revenue (MRR)?

Monthly Recurring Revenue (MRR) is the normalized, predictable revenue a SaaS business earns each month from active subscriptions. It's "normalized" because it converts all subscription terms (annual, quarterly, monthly) to a monthly equivalent. For example, a customer paying $1,200/year contributes $100 to MRR, not $1,200 in the month they pay.

MRR excludes one-time fees (setup, training, implementation), variable or usage-based charges, and non-recurring revenue like professional services. This focus on recurring revenue provides the clearest picture of sustainable business health.

What is Annual Recurring Revenue (ARR)?

Annual Recurring Revenue (ARR) is simply MRR multiplied by 12. While mathematically straightforward, ARR serves important purposes: it's the standard metric for enterprise SaaS companies with annual contracts, it's preferred by investors for comparing companies and calculating valuation multiples, and it helps smooth out monthly variations for strategic planning.

The Four Components of MRR

• New MRR: Revenue from brand new customers who signed up this month. This represents your customer acquisition engine at work.
• Expansion MRR: Additional revenue from existing customers through upsells (upgrading to higher tiers), cross-sells (adding new products), seat additions, or increased usage. Strong expansion MRR indicates product-market fit and customer success.
• Contraction MRR: Revenue lost when existing customers downgrade their plans or reduce usage while still remaining customers.
• Churned MRR: Revenue lost when customers cancel their subscriptions entirely. This is the full monthly value of departed customers.

Net New MRR: The Growth Indicator

Net New MRR = New MRR + Expansion MRR - Contraction MRR - Churned MRR

Net New MRR is the bottom-line indicator of whether your subscription business is growing or shrinking. A positive Net New MRR means your business is expanding; negative means you're losing ground faster than you're gaining it.

Understanding Churn: Revenue vs. Logo

Gross MRR Churn Rate measures the percentage of starting MRR lost to cancellations and downgrades each month. It answers: "What percentage of my revenue walked out the door?"

Logo Churn Rate (or Customer Churn) measures the percentage of customers lost, regardless of their revenue contribution. It answers: "What percentage of my customers left?"

These metrics can tell very different stories. A company might have high logo churn (losing many small customers) but low revenue churn (retaining enterprise accounts). Understanding both reveals the complete picture.

Net Revenue Retention (NRR): The North Star Metric

Net Revenue Retention (NRR) is the percentage of revenue retained and grown from your existing customer base, accounting for both churn and expansion. An NRR above 100% means your expansion revenue exceeds your churn—you're growing even without acquiring new customers. Top-performing SaaS companies achieve NRR of 120% or higher.

Follow these step-by-step instructions to calculate your SaaS metrics and project your revenue growth:

1. Enter Your Current MRR: Input your total Monthly Recurring Revenue right now. This is the sum of all active subscription revenue normalized to a monthly basis. For annual contracts, divide by 12. This becomes your baseline for projections.
2. Input Your Monthly Revenue Flows:
   • New MRR per Month: Average MRR from new customers signing up each month
   • Expansion MRR per Month: Average additional revenue from upsells, upgrades, and seat additions
   • Churned MRR per Month: Average MRR lost to cancellations and downgrades

   Tip: Use 3-6 month averages if your numbers vary significantly month to month.

3. Add Customer Data (Optional but Recommended):
   • Current Customer Count: Total number of active paying customers
   • Churned Customers per Month: Average number of customers who cancel monthly

   This enables logo churn calculations and customer-based analytics.

4. Set Your Projection Horizon: Choose how many months to project (1-60 months). Shorter projections (12-24 months) are more reliable; longer projections (36-60 months) help with strategic planning but assume constant growth rates.
5. Click "Calculate" and Review Results: The calculator displays:
   • Current and projected MRR/ARR values
   • Gross MRR churn rate and logo churn rate
   • Net Revenue Retention percentage
   • Monthly growth rate and months to double MRR
   • Visual charts showing revenue trajectory over time
6. Run Scenario Analysis: Experiment with different inputs to see how changes in acquisition, expansion, or churn affect your projected outcomes. This helps identify the highest-impact levers for your business.

Core MRR/ARR Calculations

Churn Rate Formulas

Net Revenue Retention Formula

Growth and Projection Formulas

ARPU Calculation

The Compounding Effect of Churn

A critical insight: churn compounds over time. A 5% monthly churn rate doesn't mean 60% annual churn—it's actually closer to 46% due to compounding:

• Confusing Revenue Recognition with MRR: MRR is not the same as cash received. A customer paying $12,000 upfront for an annual contract contributes $1,000 to MRR, not $12,000. Always normalize to monthly values for accurate MRR tracking.
• Ignoring Contraction MRR: Many teams only track full cancellations and miss downgrades. A customer moving from $500/mo to $200/mo represents $300 in contraction MRR—this matters for accurate churn calculations.
• Using the Wrong Denominator for Churn: Churn rate should use beginning-of-period MRR as the denominator, not ending or average. Using ending MRR deflates your churn rate and masks problems.
• Comparing Logo Churn to Revenue Churn Directly: A 5% logo churn and 5% revenue churn have very different implications. Always analyze both metrics together to understand which customer segments are churning.
• Assuming Linear Growth in Long-Term Projections: This calculator assumes constant monthly growth rates. In reality, growth often slows as companies scale, competition increases, or market saturation occurs. Use projections beyond 24 months with appropriate skepticism.
• Focusing on Gross Numbers Instead of Rates: Celebrating $50,000 in new MRR is meaningless if you're also churning $60,000. Always look at net figures and percentage rates to understand true business health.
• Not Segmenting Churn by Customer Type: Aggregate churn rates can hide important patterns. SMB churn of 8% might be acceptable while enterprise churn of 8% signals serious product problems. Segment your analysis whenever possible.

• Target Net Negative Churn: The holy grail of SaaS is net negative churn, where expansion revenue exceeds cancellations. This means you grow even without new customer acquisition. Focus on expansion pricing, usage-based upsells, and land-and-expand strategies to achieve this.
• Analyze Cohort-Based Churn: Overall churn rates mask important patterns. Newer customers often churn at higher rates than established ones. Track churn by cohort (month of signup) to understand when and why customers leave.
• Calculate Quick Ratio (SaaS Quick Ratio): Divide your growth MRR (New + Expansion) by your churn MRR (Churned + Contraction). A quick ratio above 4 indicates healthy growth efficiency; below 2 suggests you're fighting an uphill battle.
• Model Scenario Sensitivity: Run multiple scenarios: What if churn doubles? What if new customer acquisition drops 30%? Understanding how sensitive your projections are to input changes helps with risk management and contingency planning.
• Connect MRR to Customer Lifetime Value (LTV): Use your churn rate to calculate customer lifetime: 1 / Monthly Churn Rate = Average lifetime in months. Multiply by ARPU to get LTV. This informs how much you can afford to spend on acquisition.
• Track Leading Indicators of Churn: By the time a customer cancels, it's too late. Monitor product usage, support ticket frequency, NPS scores, and payment failures as early warning signs. Proactive intervention dramatically reduces churn.
• Benchmark Against Your Own History: Industry benchmarks provide context, but your own trajectory matters most. Track metrics monthly and look for trends—improving churn from 4% to 3% is more meaningful than comparing to a generic "good" benchmark.

Note: Benchmarks vary widely by industry, company stage, and business model. These are general guidelines, not targets.

• Constant Flows Assumption: Projections assume new MRR, expansion, and churn remain constant each month. Real businesses experience variation, seasonality, and market changes.
• No Seasonality Modeling: This calculator doesn't account for seasonal patterns in signups or cancellations common in many industries.
• Simplified Churn Model: Real churn depends on cohort age, customer segment, contract terms, and other factors not captured in aggregate metrics.
• No Market Saturation Effects: Long-term projections don't account for market size limits or increasing competition.
• Educational Purpose Only: These calculations are for learning, analysis, and rough planning. Consult financial professionals for business decisions, investor communications, or financial reporting.

The information in this guide is based on established SaaS metrics principles and authoritative sources:

• U.S. Securities and Exchange Commission (SEC) - Revenue recognition standards for subscription businesses: sec.gov
• Financial Accounting Standards Board (FASB) - ASC 606 Revenue Recognition: fasb.org
• U.S. Small Business Administration (SBA) - Subscription business model guidance: sba.gov
• SCORE Association - SaaS business metrics and financial planning: score.org