How To Calculate Net Annual Recurring Revenue in PipelineCRM | Arithmix

Calculating Net Annual Recurring Revenue (NARR) is an important metric for any business that relies on recurring revenue streams. It helps you understand the true value of your customer base and can guide your decision-making when it comes to pricing, marketing, and sales strategies. In this article, we'll explain what NARR is and how you can calculate it in PipelineCRM.

What Is Net Annual Recurring Revenue?

Net Annual Recurring Revenue is the amount of revenue a business can expect to receive from its customers on an annual basis, after accounting for any cancellations, downgrades, or upgrades. It's a measure of the predictable revenue that a business can rely on from its existing customer base. NARR is calculated by multiplying the average monthly recurring revenue (MRR) per customer by the total number of customers, and then subtracting any lost revenue due to cancellations or downgrades.

For example, if a business has 100 customers paying $100 per month, its MRR would be $10,000. If 5 customers cancel their subscriptions, the business would lose $500 in monthly revenue, or $6,000 per year. The NARR for this business would be $94,000 ($10,000 x 95 customers - $6,000).

When Is It Valuable To Calculate Net Annual Recurring Revenue?

Calculating NARR is valuable for any business that relies on recurring revenue streams, such as subscription-based services, SaaS companies, or membership organizations. It provides a clear picture of the revenue potential of your existing customer base, and can help you identify areas for growth and improvement. NARR can also be a useful metric for investors or potential buyers, as it provides insight into the long-term revenue potential of a business.

By tracking NARR over time, you can monitor the health of your business and make data-driven decisions about pricing, marketing, and sales strategies. For example, if your NARR is decreasing, it may be a sign that you need to focus on customer retention or upselling. On the other hand, if your NARR is increasing, it may be a sign that your pricing strategy is effective and you should consider expanding your customer base.

In conclusion, calculating Net Annual Recurring Revenue is a valuable tool for any business that relies on recurring revenue streams. By understanding the true value of your customer base, you can make informed decisions about pricing, marketing, and sales strategies, and ensure the long-term success of your business.

How Do You Calculate Net Annual Recurring Revenue in PipelineCRM

PipelineCRM itself isn’t naturally geared towards letting you calculate complex metrics like Net Annual Recurring Revenue. As an alternative, teams typically use products like Arithmix to import data from PipelineCRM 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 PipelineCRM, combine it with data from other systems, and create calculations like Net Annual Recurring Revenue.

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.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Net Annual Recurring Revenue in Arithmix

Calculating metrics like Net Annual Recurring Revenue is simple in Arithmix. Once you've created your free account, you’ll be able to import your PipelineCRM data, and use it to create natural language formulas for metrics like Net Annual Recurring Revenue.

Arithmix is designed to give you the power to build any calculations you want on top of your PipelineCRM data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.