← GlossaryUnit economics
ARR
Also known as · Annual Recurring Revenue
MRR multiplied by 12 — the annualized run rate of subscription revenue.Annual recurring revenue (ARR) is MRR × 12, representing the annualized run-rate of subscription revenue assuming no churn or growth. ARR is the standard metric for SaaS valuation, board reporting, and investor conversations once a business is past early stage. Mid-market SaaS valuations in 2026 average 4-8× ARR depending on growth and margin profile.
Related terms
Other unit economics terms.
CAC
Total marketing + sales spend divided by new customers acquired.
LTV
Total value a customer delivers over the duration of their relationship.
AOV
Total revenue divided by total orders for a period.
MRR
Total predictable monthly subscription revenue across all active customers.
Churn Rate
Percentage of customers who cancel or fail to renew in a given period.
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