ARR (Annual Recurring Revenue)
Detailed Explanation
ARR represents the annual recurring revenue SaaS companies expect from subscriptions. This metric is critical for business planning and investor presentations, as it shows the predictable, recurring revenue stream that makes SaaS businesses valuable.
Example
If you have 100 customers paying €100/month → ARR = 100 × €100 × 12 = €120,000 annual recurring revenue.
Why ARR Matters
ARR is the most important metric for SaaS companies because it represents predictable revenue. Unlike one-time sales, ARR shows the health and scalability of your business model. Investors use ARR to value SaaS companies and track growth trajectory.
ARR in B2B outbound
For outbound planning, an ARR target turns into a meeting target. New ARR needed divided by the average contract value gives the number of deals; your win rate and meeting-to-opportunity rate turn that into meetings, and your reply rate into the number of people to contact. Work backwards like this before deciding how many mailboxes and LinkedIn seats you need.