How To Calculate Net ARR in Microsoft Dynamics | Arithmix

Learn how to calculate Net Annual Recurring Revenue (ARR) in Microsoft Dynamics with our step-by-step guide. Maximize your revenue potential and gain valuable insights into your business performance.

Calculating Net Annual Recurring Revenue (ARR) is a crucial aspect of any business that relies on recurring revenue streams. Net ARR is the total revenue generated from all recurring sources, minus any discounts, refunds, and cancellations. In this article, we will discuss what Net ARR is, why it is valuable to calculate it, and how to calculate it in Microsoft Dynamics.

What Is Net ARR?

Net ARR is a metric that helps businesses understand their recurring revenue streams. It is the sum of all recurring revenue generated by a business, minus any discounts, refunds, and cancellations. This metric is essential for businesses that rely on recurring revenue streams, such as subscription-based businesses or SaaS companies. By calculating Net ARR, businesses can understand their true revenue potential and make informed decisions about future investments.

Net ARR is different from Gross ARR, which is the total revenue generated from all recurring sources, including discounts, refunds, and cancellations. Gross ARR is a useful metric for understanding the overall revenue potential of a business, but it does not provide an accurate picture of the revenue that a business can expect to receive over time.

When Is It Valuable To Calculate Net ARR?

Calculating Net ARR is valuable for any business that relies on recurring revenue streams. This includes subscription-based businesses, SaaS companies, and any business that offers ongoing services to customers. By understanding their Net ARR, businesses can make informed decisions about future investments and growth strategies.

For example, if a SaaS company has a Net ARR of \$1 million, they can expect to generate \$1 million in revenue from their recurring revenue streams over the next year. This information can help the company make informed decisions about future investments, such as hiring additional sales staff or investing in marketing campaigns to attract new customers.

How to Calculate Net ARR in Microsoft Dynamics

Calculating Net ARR in Microsoft Dynamics is a straightforward process. Here are the steps:

1. Identify all recurring revenue streams: This includes any subscriptions, ongoing services, or other sources of recurring revenue.
2. Calculate the total revenue generated from these sources: This is the Gross ARR.
3. Identify any discounts, refunds, or cancellations: Subtract these from the Gross ARR to arrive at the Net ARR.

For example, let's say a business has the following recurring revenue streams:

• 100 monthly subscriptions at \$50 per month
• 50 annual subscriptions at \$500 per year
• 10 ongoing services at \$1,000 per month

The Gross ARR for this business would be:

(100 x \$50 x 12) + (50 x \$500) + (10 x \$1,000 x 12) = \$780,000

If the business had \$20,000 in discounts, \$5,000 in refunds, and \$10,000 in cancellations, the Net ARR would be:

\$780,000 - \$20,000 - \$5,000 - \$10,000 = \$745,000

By calculating Net ARR, businesses can gain a better understanding of their recurring revenue streams and make informed decisions about future investments and growth strategies.

How Do You Calculate Net ARR in Microsoft Dynamics

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

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.