ARR = MRR x 12. Alternatively, ARR = (Monthly Subscribers x Monthly Price x 12) + (Annual Subscribers x Annual Price). For normalized calculations, include only recurring subscription revenue — exclude one-time purchases, tips, or ad revenue.
MRR (Monthly Recurring Revenue) measures your predictable monthly income, while ARR annualizes it. ARR = MRR x 12. MRR is better for short-term operational decisions, while ARR is preferred for fundraising, valuation, and annual planning.
No. Only include revenue from users who are actively paying. Trial users have not yet converted, so counting them would inflate your ARR and give a misleading picture of your business health. You can track ‘potential ARR’ separately if trial conversion rates are predictable.
Early-stage apps should aim for 2-3x annual growth. Once you pass $1M ARR, growing 80-100% year-over-year is considered strong. At $10M+ ARR, 40-60% growth is impressive. The key benchmark is whether your growth rate is accelerating or decelerating.
A method of product experimentation in which users are randomly split into two or more cohorts (e.g., Group A and Group B), with each group exposed to a different variation of a feature such as copy, design, or pricing. A primary success metric is established before the test begins, and the outcome is typically measured using frequentist statistics and confidence intervals to determine if one version outperforms the other — or if results are inconclusive.
A key stage in the customer lifecycle that occurs after acquisition. Activation is defined by a user completing a high-value action for the first time — such as starting a trial, making a purchase, or engaging with a core feature. The exact definition depends on the app’s monetization model and business goals.
A user who currently has an active, paid subscription. This excludes users in a grace period, trial, or lapsed state, and is typically the core population used when calculating MRR or churn rate.
The process of improving an app’s visibility in app store search results and browse sections (e.g., on Apple’s App Store or Google Play). ASO involves optimizing elements like the app name, description, keywords, icon, screenshots, and video preview to drive organic installs and improve conversion rates from page views to downloads.
Apple’s paid user acquisition channel that displays targeted ads at the top of App Store search results. ASA allows marketers to bid on keywords, define demographic and behavioral targeting, and optimize campaigns based on user value post-install, such as subscription conversion or trial start.
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