What is Annual Recurring Revenue and why is it important?
When growing a SaaS business, it is essential to use a subscription-based revenue model. This business model has the advantage of ensuring regular revenue once a customer has subscribed to a service. And, this is useful for planning the future of a business, and reassuring investors.
Annual recurring revenue (ARR) is a business metric designed for subscription-based companies. It allows them to forecast their company's future revenues and calculate the rate at which they need to grow to keep building on their success.
Here is a complete guide on what is Annual Recurring Revenue and how to calculate it.