What the Subscription Pricing Calculator does
This calculator turns a set of subscription plans - flat or per seat, monthly or annual, with usage overage and discounts - into MRR, ARR, gross margin and churn-adjusted revenue, and then tests what a price change would do if some customers leave because of it.
It is transparent arithmetic in your browser. The formulas are printed below, including how churn is compounded, so you can check any figure or rebuild the model in a spreadsheet.
How to use it
- Describe each plan: list price, whether it is per seat and how many seats a typical customer has, how many customers are on it, and whether they pay monthly or prepay annually at a discount.
- For usage-based plans, enter the units a typical customer uses, how many are included and the price per extra unit. Add what a seat and a unit cost you to serve.
- Enter monthly churn and the payment fee. Read MRR, ARR, gross margin, annual churn and the revenue the current base will bring in over the next 12 months if nobody new joins.
- Test a price change: the percentage change, the share of customers you expect to lose straight away and any rise in monthly churn. The tool compares 12 months of revenue and gross profit with and without the change.
Reading the results
MRR here is the monthly-equivalent revenue: an annual plan's invoice divided by twelve. ARR is simply MRR times twelve - a run-rate, not a forecast.
Annual churn compounds: 2% a month is 21.5% a year, not 24%. The 12-month revenue figure uses the same compounding, so it is lower than twelve times MRR whenever churn is above zero.
The break-even customer loss is the share of customers a price rise can lose immediately before MRR falls. A 10% rise breaks even at a 9.09% loss. Whether you will actually lose that many is the unknown the tool cannot answer - test it with real customers, not a spreadsheet.
Worked example: a Team plan and a 10% price rise
A Team plan costs $12 per seat a month; the typical customer has 5 seats and 100 customers prepay annually at 20% off. The list price is $60 a month, the billed monthly equivalent $48 (an annual invoice of $576), so MRR is $4,800 and ARR $57,600.
Seats cost $1.50 each to serve and the payment fee is 3%, so each customer costs $7.50 + $1.44 = $8.94 a month and the gross margin is $39.06 / $48 = 81.4%.
With 2% monthly churn, annual churn is 1 - 0.98^12 = 21.5%, and the 12-month revenue from today's customers is $4,800 x (1 - 0.98^12) / 0.02 = $51,668. A 10% rise that loses 5% of customers gives MRR of $4,800 x 1.10 x 0.95 = $5,016 - up, because 5% is below the 9.09% break-even loss.
Formulas and scoring rules
- List and billed price
list = price x seats (per-seat) or price (flat); billed = list x (1 - annual discount, if billed annually) x (1 - promotional discount)- Usage
usage = max(0, units - included units) x price per unitBilled monthly, with no annual discount.- ARPA, MRR and ARR
ARPA = billed + usage; MRR = ARPA x customers; ARR = MRR x 12- Gross margin
cost = seats x cost per seat + units x cost per unit + ARPA x payment fee; margin = (ARPA - cost) / ARPA- Churn
annual churn = 1 - (1 - c)^12; 12-month revenue = MRR x (1 - (1 - c)^12) / c; lifetime = 1 / c months; LTV = ARPA x margin / cc is monthly churn as a fraction. With c = 0 the 12-month revenue is MRR x 12.- Price change
new MRR = sum over plans of new ARPA x customers x (1 - loss); break-even loss = p / (1 + p)Usage prices are not changed. Nothing is rounded until display; money shows 2 decimals, rounded half away from zero.- Annualisation
annual price = monthly x 12 x (1 - discount); months free = 12 x discountA 16.67% discount is two months free.
Limitations: what the result does not prove
- It models the customers you have today. New sales, expansion revenue, upgrades and downgrades are not included, so the 12-month figure is a floor for a growing business, not a forecast.
- Churn and price-change losses are assumptions you enter. The tool does not know how your customers will react to a new price.
- Every customer on a plan is treated as typical. If seat counts or usage vary widely, split the plan into groups.
- Costs cover serving and payment only. Sales, marketing, support and overheads are left out, so gross margin is not profit.
Privacy: where your data goes
Everything you paste, type or drop is processed in this browser tab. It is not uploaded, logged, stored or sent to analytics. Session recording and tag-manager scripts are switched off on this page.
Standards and sources
Frequently asked questions
How do I convert monthly churn into annual churn?
Compound it: annual churn = 1 - (1 - monthly churn)^12. At 2% a month you keep 0.98^12 = 78.5% of customers after a year, so annual churn is 21.5%. Multiplying 2% by twelve overstates it.
How much should an annual plan be discounted?
There is no single right number; 15-20% (about two months free) is common. Use the annualisation line and the plan table to see what the discount costs in MRR, and weigh it against lower churn and cash paid up front.
How many customers can I lose after a price increase and still gain revenue?
For a price rise of p, the break-even immediate loss is p / (1 + p). A 10% rise can lose up to 9.09% of customers, a 20% rise up to 16.7%. Any extra churn afterwards eats into that margin, which is why the tool compares 12 months rather than one.
Should usage-based revenue count in MRR?
Many companies include recurring usage at its typical level and exclude one-off spikes. This tool includes the usage you enter as part of ARPA, so enter a representative month rather than a peak.
What does gross-profit LTV mean here?
It is the gross profit an average customer brings in over their expected lifetime: ARPA times gross margin, divided by monthly churn. It ignores discounting and acquisition cost, so compare it with what you pay to win a customer rather than treating it as a valuation.
Why is my 12-month revenue lower than ARR?
ARR assumes every current customer stays for a year. The 12-month figure lets customers churn month by month at your rate, so with any churn above zero it is lower. The gap shows how much new business you need just to stand still.
Last reviewed by the A2Z.Tools team against the sources listed above.
