SaaS Talk™ with the Metrics Brothers Is ARR Dead?
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Jun 25, 2025 Dive into the debate around the evolving definition of Annual Recurring Revenue (ARR) in the SaaS world. Explore how variable pricing models, like usage-based pricing, complicate revenue reporting. The hosts share insights from industry influencers and their experiences, discussing how these changes impact financial forecasting and investor perception. Uncover strategic pricing models that align business growth with revenue metrics while navigating the complexities of software pricing. It's a thought-provoking look at whether ARR is truly 'dead' or just transforming.
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ARR is wounded, not dead
- ARR is not dead but wounded due to evolving SaaS business models like variable pricing.
- Changes in pricing dilute ARR's original meaning, challenging traditional SaaS metrics.
Variable Revenue Counts as ARR
- Many companies include variable revenue in ARR despite its uncertainty.
- Recurring revenue conceptually includes predictable patterns even without explicit contracts.
Define MRR Before ARR Multiplication
- Defining ARR by multiplying MRR by 12 is common but lacks clarity if MRR itself isn't defined.
- Clear, precise metric definitions are essential to avoid confusion.