Annual Recurring Revenue (ARR)
The annualized value of your recurring subscription revenue.
Definition
ARR is simply MRR × 12. It represents the yearly value of your subscription contracts and is the standard metric for SaaS valuation. ARR milestones ($1M ARR, $10M ARR, $100M ARR) are industry benchmarks that determine fundraising stage, valuation multiples, and strategic options.
Why it matters for founders
ARR is the language VCs speak. "We're at $2M ARR growing 3x year-over-year" immediately communicates your stage and trajectory. SaaS valuations are typically expressed as multiples of ARR.
Example
500 customers at $200/month = $100K MRR = $1.2M ARR. At a 10x revenue multiple, this company is worth roughly $12M.
How Foundra helps
Foundra's Pricing & Packaging card models your pricing to project ARR milestones, helping you set targets that attract the right investors at the right stage.
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Related terms
Monthly Recurring Revenue (MRR)
The predictable revenue your business generates every month from subscriptions.
Unit Economics
The revenue and costs associated with a single unit of your business (usually one customer).
Seed Round
The first significant round of venture funding, typically $500K-$5M.
Lifetime Value (LTV)
The total revenue a customer generates over their entire relationship with your business.
Revenue Multiple
A valuation method that prices a company as a multiple of its annual revenue.