ARR as a Percentage of Total Revenue measures the percentage of your total revenue that comes from recurring revenue as opposed to one-time or non-subscription revenue.
Say your ARR is $100,000 and your total revenue is $120,000. Your percentage of ARR out of total revenue is about 83%.
ƒ Sum(ARR) / Sum(Total Revenue)
The benchmark for ARR as a percentage of total revenue varies depending on the industry, business model, and company growth stage. Most SaaS companies target 70-80% ARR as a percentage of the total revenue. A high percentage of ARR as a proportion of total revenue is considered positive for subscription-based businesses. It implies that most of the company’s revenue comes from recurring sources.
Annual Recurring Revenue
Net Annual Recurring Revenue Added
Net Revenue Retention Rate