Annual Recurring Revenue (ARR) is a financial metric that measures the portion of a company's revenue that is expected to recur on an annual basis. This metric is typically used by companies that offer subscription-based products or services, as it provides a way to measure the long-term value of a customer.
For example, a company that sells software as a service (SaaS) might have a customer who pays $100 per month for a subscription to the software.
In this case, the customer's annual recurring revenue would be $100 x 12 = $1,200.
This means that the company can expect to receive $1,200 in revenue from this customer on an annual basis, assuming that the customer continues to renew their subscription.
What is Finanshels?Setting up a good small-business bookkeeping system can be an involved process, especially if you’re not an experienced bookkeeper. Rather than spending enormous time and effort on getting your books up and running, consider turning to Finanshels for help. We’ll set up your bookkeeping system to ensure that your business is starting off right – and we’ll save you a huge amount of stress.Want someone to help you organize your bookkeeping system? Try Finanshels
