How To Calculate Net Annual Recurring Revenue in Quickbooks Pro | Arithmix

Calculating net annual recurring revenue is an important task for any business owner. It helps you understand the amount of revenue your business generates on a recurring basis, which is essential for forecasting and planning. In this article, we will discuss what net annual recurring revenue is, when it is valuable to calculate it, and how to calculate it.

What Is Net Annual Recurring Revenue?

Net Annual Recurring Revenue (NARR) is the amount of revenue generated by a business from its recurring customers over a year, after accounting for any cancellations, refunds, or discounts. It is a key metric for subscription-based businesses, as it helps them understand the value of their customer base and the potential for growth.

For example, if a business has 100 customers who pay $100 per month, the monthly recurring revenue (MRR) would be $10,000. If the business retains all of these customers for a year, the annual recurring revenue (ARR) would be $120,000. However, if 10 customers cancel their subscriptions during the year, the NARR would be $108,000.

When Is It Valuable To Calculate Net Annual Recurring Revenue?

Calculating NARR is valuable for any business that relies on recurring revenue, such as subscription-based businesses, SaaS companies, and membership organizations. It helps these businesses understand the value of their customer base and the potential for growth.

By tracking NARR over time, businesses can identify trends and make informed decisions about pricing, marketing, and retention strategies. For example, if NARR is decreasing, it may be a sign that customers are not finding enough value in the product or service, or that competitors are offering better alternatives.

How To Calculate Net Annual Recurring Revenue

Calculating NARR involves a few simple steps:

1. Calculate the monthly recurring revenue (MRR) by multiplying the number of customers by the average monthly revenue per customer.
2. Calculate the annual recurring revenue (ARR) by multiplying the MRR by 12.
3. Subtract any cancellations, refunds, or discounts from the ARR to get the NARR.

For example, if a business has 200 customers who pay $50 per month on average, the MRR would be $10,000. The ARR would be $120,000 ($10,000 x 12). If the business had $12,000 in cancellations, refunds, and discounts during the year, the NARR would be $108,000 ($120,000 - $12,000).

By tracking NARR over time and making adjustments to pricing, marketing, and retention strategies, businesses can increase their recurring revenue and achieve sustainable growth.

How Do You Calculate Net Annual Recurring Revenue in Quickbooks Pro

Quickbooks Pro 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 Quickbooks Pro 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 Quickbooks Pro, 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 Quickbooks Pro 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 Quickbooks Pro 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.