# How To Calculate Annual Recurring Revenue Cohort Analysis in Sage | Arithmix

Learn how to perform annual recurring revenue cohort analysis in Sage with our step-by-step guide. Discover the insights you need to make informed business decisions and optimize your revenue streams.

Annual Recurring Revenue Cohort Analysis is a powerful tool that can help businesses understand the revenue generated by their customers over a period of time. It is a method of analyzing customer behavior and revenue trends by grouping customers into cohorts based on the time they signed up for a product or service. This analysis can be used to identify trends, patterns, and opportunities for growth. In this article, we will discuss what Annual Recurring Revenue Cohort Analysis is, when it is valuable to calculate it, and how to calculate it using Sage.

## What Is Annual Recurring Revenue Cohort Analysis?

Annual Recurring Revenue Cohort Analysis is a method of analyzing customer behavior and revenue trends by grouping customers into cohorts based on the time they signed up for a product or service. This analysis can help businesses understand how much revenue is generated by each cohort of customers over a period of time. By grouping customers into cohorts, businesses can identify trends and patterns in customer behavior and revenue generation.

For example, a business may group customers who signed up in January into one cohort, customers who signed up in February into another cohort, and so on. By analyzing the revenue generated by each cohort over a period of time, the business can identify trends in customer behavior and revenue generation. This analysis can help businesses identify opportunities for growth and optimize their revenue generation strategies.

## When Is It Valuable To Calculate Annual Recurring Revenue Cohort Analysis?

Annual Recurring Revenue Cohort Analysis is valuable for businesses that offer subscription-based products or services. This analysis can help businesses understand how much revenue is generated by each cohort of customers over a period of time. By identifying trends and patterns in customer behavior and revenue generation, businesses can optimize their revenue generation strategies and identify opportunities for growth.

For example, a business may notice that customers who signed up in January generate more revenue than customers who signed up in February. By understanding this trend, the business can optimize their marketing and sales strategies to attract more customers in January and increase their revenue generation.

## How to Calculate Annual Recurring Revenue Cohort Analysis in Sage

To calculate Annual Recurring Revenue Cohort Analysis in Sage, businesses need to follow these steps:

1. Identify the time period for the analysis. This could be a month, a quarter, or a year.
2. Group customers into cohorts based on the time they signed up for the product or service.
3. Calculate the revenue generated by each cohort over the time period.
4. Calculate the Annual Recurring Revenue (ARR) for each cohort. This is the total revenue generated by each cohort over the time period divided by the number of months in the time period.
5. Plot the ARR for each cohort on a graph to identify trends and patterns in customer behavior and revenue generation.

By following these steps, businesses can calculate Annual Recurring Revenue Cohort Analysis in Sage and use this analysis to optimize their revenue generation strategies and identify opportunities for growth.

## How Do You Calculate Annual Recurring Revenue Cohort Analysis in Sage

Sage itself isn’t naturally geared towards letting you calculate complex metrics like Annual Recurring Revenue Cohort Analysis. As an alternative, teams typically use products like Arithmix to import data from Sage and build out dashboards.

## What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Sage, combine it with data from other systems, and create calculations like Annual Recurring Revenue Cohort Analysis.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.