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How SaaS Companies Turn Usage Revenue into ARR

How SaaS Companies Turn Usage Revenue into ARR

SaaS Metrics School

July 18, 20254m 22s

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Show Notes

How do usage-based SaaS companies convert transactional or variable revenue into Annual Recurring Revenue (ARR)? Episode #299 gives you a practical framework for presenting usage-based ARR to your Board, investors, and internal teams with clarity and confidence.

After manually reviewing hundreds of public filings and investor materials, Ben Murray breaks down the real-world methods used by companies like Confluent and Datadog to turn usage into ARR.

What You’ll Learn

  • The most common method for usage-based ARR

  • The second most common method

  • How these methods compare to traditional MRR x 12 for subscription models

  • Why ARR is often used as a North Star Metric and how transparency is improving across SaaS companies.

Resources Mentioned

Ben’s Research Process

“Over 100 hours of manual research. I tried using AI—OpenAI couldn’t handle it. I had to read the filings myself. These ARR methods are backed by real-world data from public SaaS companies.”