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GLOSSARY DEFINITION • SAAS PLATFORMS

Annual & Monthly Recurring Revenue (ARR / MRR)

Annual and Monthly Recurring Revenue contracted from active software subscriptions, normalized for contract duration and tier.

ARR / MRR FORMULA & STANDARD
Net New ARR = New Subscriptions + Expansion ARR − Contraction ARR − Churned ARR

₹40L new + ₹10L expansion − ₹3L contraction − ₹5L churn = ₹42L Net New ARR

01 / DEFINITION & SIGNIFICANCE

Why ARR / MRR matters for SaaS Platforms

Annual and Monthly Recurring Revenue contracted from active software subscriptions, normalized for contract duration and tier.

Recurring revenue forms the core enterprise valuation multiple for software scaleups. Marketing must be evaluated not merely on sign-ups, but on high-retention Net New ARR added to the balance sheet.

02 / THE CALCULATION BLUEPRINT

How to track and calculate ARR / MRR

Net New ARR = New Subscriptions + Expansion ARR − Contraction ARR − Churned ARR

₹40L new + ₹10L expansion − ₹3L contraction − ₹5L churn = ₹42L Net New ARR Tracking this metric systematically inside your analytics stack eliminates guesswork and aligns marketing spend with true business outcomes.

03 / INDUSTRY BENCHMARK MATRIX

Typical ARR / MRR benchmarks by segment

Segment / Business Model Typical Range DesignScript Target
Early-Stage Scaleup ($1M - $5M ARR)80% – 150% YoY> 100%
Growth-Stage SaaS ($5M - $20M ARR)50% – 90% YoY> 70%
Enterprise Software ($20M+ ARR)30% – 60% YoY> 40%
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