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What is ARR? Annual recurring revenue explained. ARR is a critical concept for many businesses and especially common metric in subscription and SAAS technology companies

In this video I'm going to explain to you what is ARR and why it's really important that you get more of it even if you don't know quite yet what ARR even is. So ARR is your annual recurring revenue and it's something that a lot of times software and SAAS (software as a service) and technology companies are really interested in because it tells you how much of your business is recurring where someone signs up and they sign up and they pay again and again and again versus one-time business and there's a lot of reasons why having recurring customers is super important namely is because you don't have to worry about the large cost associated with going out and searching and seeking and getting new customers and also just the predictability associated with having recurring revenue a lot of us intuitively already know that when you have an existing customer base who is going to be the best person to sell new services to or just generally to to sell to it's your existing customer base right because one your existing customer base already knows likes and trusts you um so you have an existing established relationship with them and also because they can be an excellent source of referrals of word of mouth all of those types of growth are far less costly than hitting a cold market with advertising and marketing expenses so when you're able to kind of plan and project your revenue next year what you might want to consider doing is looking at you know how much have i made so far over a short period of time and how much of that do I anticipate to be recurring with the same client base you want to treat those clients especially well you want to really take good care of them because they're really the they're the heartbeat of your entire business so ARR is just a notion of how you think about some of the recurring elements of your business revenue of your of your revenue streams and ultimately you're trying to find a way to always be increasing your ARR because it's always better for you to have an existing client base rather than seeking these one-off one-time customers because a one-off one-time customer is longer and harder to get brought into your customer base and ultimately introduces some additional risk because you don't have an existing relationship with them they don't know what to expect with you really really common concept used with software companies but a lot of even more traditional brick and mortar companies can benefit from looking at their finances and planning the year out with an intentional goal of how do I go about increasing my recurring revenues year after year so now you know what ARR is and why you should try and get more ARR.

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