Monthly Recurring Revenue (MRR) is your predictable monthly revenue based on the number of subscribers in each subscription plan. We outline the difference between MRR and Actual Revenue here.
MRR is helpful for reporting growth, analyzing trends, and planning for the future.
You'll see your Current MRR on your Subscription tab.
We recalculate MRR in the platform every 10 minutes.
How We Calculate MRR
We've designed our MRR calculation to take into account all plan durations, whether it's monthly, quarterly, yearly, etc.
We take the latest paid invoice amount of each customer with active subscription access (this includes customers who are pending cancellation because the final date of their subscription has not passed). Then we divide by the number of days in their subscription period.
From there, we multiply daily recurring revenue by the average amount of days in the month during the year (30.41 days).
Here's an example calculation for one subscriber, based on the most recently paid invoice of $100 for a yearly subscription.
$100 / 365 days * AVERAGE_MONTH_DURATION (30.41) = $8.33
A Few Things That Can Affect MRR
Now, if you are looking at the number of active subscribers and know what your MRR should be, but it's not that number, well, there can be a few things that might be affecting the calculation.
The most recent invoice for a customer may have a coupon code applied, so if you have a few customers redeeming a $5 dollar coupon, it all adds up to reduce your MRR.
Since MRR relies on the most recent invoice, subscribers who have not yet paid an invoice will not be included in the calculation. This can apply to trial subscriptions or if you as an admin grant direct access to a plan, then that subscriber has essentially bypassed the initial checkout/payment process. Once they pay their first invoice they will be included in the calculation.
MRR is not a static number. Every month you will see different predictions because there are always positive and negative changes within a business. MRR will help you understand the state of your subscriptions. Our new graphs will help you analyze how many people sign up, how much they purchase in content, how many cancel their plans or even downgrade, etc. in a given month over a 12-month period. The breakdown will help you have an idea of what is happening every month and even compare a specific month with the rest of the year.
If you would like to have a detailed view of your MRR, navigate to Subscription>Current MRR and click on See Breakdown.
The MRR page will contain two graphs: MRR and Growth Rate. The information provided is based solely on subscription plans and not on bundles, so you might encounter a discrepancy between the MRR calculation and your overall sales. These two graphs will provide details for up to 12 months. After one year, the information is refreshed, and we recalculate for the new year.
The MRR graph will provide the overall monthly revenue, and you can compare it with the previous months to check how the business is doing. Under the MRR, you will have a breakout of the metrics used to calculate the MRR. When you hover over the graph, you will see the recurring revenue for that month and a comparison with the previous month's revenue.
MRR Metrics Breakdown:
New: New users that signed up
Expansion: Users who have upgraded their plans
Reactivation: Users who had previously canceled their plans and then returned to purchase your content
Contraction: users who have downgraded on your plans
Churn: Users who have canceled their plans
Change: the difference of the total from New, Expansion, and Reactivation vs. the total from Contraction and Churn
Growth Rate Graph
Growth Rate measures each month's percentage increase in net MRR. Since MRR is constantly changing as new revenue increases and customers churn, downgrade or upgrade, the growth rate shows the net variation of those factors each month. The growth rate is a solid indicator of how your business is growing.
Growth Rate Metrics Breakdown:
New: Growth percentage of new users that signed up
Expansion: Growth percentage of users who have upgraded their plans
Reactivation: Growth percentage of users who had previously canceled their plans and then returned to purchasing your content
Contraction: Growth percentage of users who have downgraded on your plans
Churn: Growth percentage of users who have canceled their plans
Net: The predicted profitable amount you will earn
Keep in mind that contraction will also include subscribers who change subscription plans where the new daily rate is less than the previous daily rate of the former subscription.
NOTE: The information provided in these graphs cannot be downloaded as reports; however, you can create a feature request if this is something you would be interested in.