MRR Analytics Intro

Please be aware that MRR Analytics are currently in Beta status.

What is MRR?

Monthly Recurring Revenue, or MRR, is one of the most important operational metrics for SaaS businesses. It is a measure of your expected monthly recurring revenue based on snapshots of your subscriber base. As customers sign up and upgrade, MRR goes up. As customers downgrade or churn, MRR goes down.

For subscribers who pay monthly, the MRR is simply the price paid each month for the subscription. If customers are paying for more than one month up front (e.g. 12 months), the MRR is calculated as the amount paid divided by the number of months in the subscription period.

  • Product cost, quantity-based components, and on/off components are normalized and included.
  • One-time payments and metered charges are excluded.
  • Discounts/coupons are deducted prior to calculation.
  • Setup fee and trial charges are excluded.
  • Taxes are excluded.

Examples

  • A subscriber on a $10/mo plan (with no other add-on charges) has an MRR value of $10.
  • A subscriber on a $120/year plan (with no other add-on charges) also has an MRR value of $10.
  • A subscriber on a $10/mo base plan with 10 $1 widgets (a quantity-based component) has an MRR value of $20.
  • A subscriber on a $10/mo base plan who uses $20 worth of metered minutes in one month and $15 worth of metered minutes in the next month has an MRR of $10.

Note that MRR is not the same as “cash received”. It is a snapshot of the current value of your subscribers. This makes MRR a great leading indicator of your business performance, since signups, growth, and churn impact the metric as they happen.

Using and Understanding Chargify MRR Reports

Your MRR Analytics Reports are available from the “Analytics” tab, within the “MRR Report” sub-tab.

MRR Growth

MRR Growth (also known as MRR Movement) shows you how your MRR is changing over time. It tracks the incremental changes due to MRR-impacting events across 5 categories:

  • New Business: Increases in MRR from new customers, such as new signups or conversions from trial/free to paid. See the section below about optimizations around New Business MRR.
  • Expansion: Increases in MRR due to upgrades or increases of add-ons/extras.
  • Contraction: Decreases in MRR due to downgrades or descreases of add-ons/extras.
  • Churn: Decreases in MRR due to subscription deletions, cancellations, account closures, or downgrades to a free level
  • Reactivation: Increases in MRR due to previously canceled accounts becoming active again.

Your Net MRR Growth is essentially the sum of these 5 categories:

Net Growth = New Biz + Expansion - Contraction - Churn + Reactivation

We present MRR Growth both as a chart and as a table of data. Note that you can click any cell of the table to drill into the accounts that comprise the data you see:

New Business MRR Optimizations

If New Business MRR is recorded for a customer and then they upgrade or downgrade within the same calendar month, we count the upgrade or expansion as additional New Business MRR for the same subscriber.

This might happen if a new customer signs up and then quickly realizes they are interested in one of your more expensive plans. Since they are essentially still “new to you”, we lump both of these actions into “New Business” instead of “New Business” followed by “Expansion”.

Total MRR

Your Total MRR is the point-in-time value of the total MRR across your entire subscriber base.

The MRR at the end of any period or timerange is correlated to your Net MRR Growth:

Period-end MRR = Period-start MRR + Net MRR Growth

Total MRR will correlate loosely to cash received, but the values will not be the same. MRR deviates from cash due to the timing of changes, when sales are booked vs. received, monthly normalization (ammortization), and other factors. The best practice is to use MRR as an operational metric rather than a financial metric.

MRR Activity & Events

In order to drill deeper into what is affecting your MRR Movements, we provide an Activity view of all events that impact your MRR.

This is available via any of the following methods:

  • Clicking the “View Details” button when hovering a bar in the MRR Growth Chart.
  • Clicking a cell in the data table for a given MRR category in a period.
  • Clicking the “View Details” button when hovering a bar in the Total MRR Chart.

From within the Activity popup, you can change the category filter to see just certain kinds of activity or everything.

Date & Interval Picker

The date and interval picker allows you to select the date range and period interval (day, week, month, or quarter) you would like to view.

For your convenience, we provide several helpful defaults (“This Month”, “Last Month”, “Year to date”, etc.) using the menu built into the picker.

Trend Stats

The Trend Stats at the top of the page give you a quick, at-a-glance view of your current Total MRR and how it compares to history. The percentage change indicators describe how your current MRR compares to those points in the past.

Daily MRR Summary Email

If you love looking at your MRR numbers every day, you will definitely want to opt-in to the Daily MRR Summary Email!

Steps to enable the Daily MRR Summary Email

  1. Click “MRR Settings” in the upper right of your MRR page
  2. Click the checkbox next to “Send me a Daily MRR Summary email”
  3. Optionally, enter in “Additinal Recipients” any other email addresses that you wish to receive the email

The daily summary email is sent early each morning (approximately 4am in your Site’s configured time zone) to all of the recipients.

All time ranges are computed in relation to your Site’s configured time zone. The email does not contain any data related to activity that has occurred after midnight in that zone - that data will be on tomorrow’s email!

  • Yesterday: Midnight-to-midnight for the prior day
  • This Week: Activity from Monday at 12am until last night at midnight
  • This Month: Activity from 12am on the first of the month until last night at midnight.

Digging Deeper: About our MRR Calculations and Best Practices

We’ve made some choices that align with MRR best practices and give you the best view of your business:

Coupons and Discounts

Coupons are removed from plan charges before arriving at your MRR numbers. A new subscriber to your $100/mo plan with a 20% off, 3-month coupon would yield $80 in New Business MRR for the first 3 months, then $100 in MRR (of which $20 is expansion MRR) when the coupon expires.

Adjustments and Credits

Occasionally you may apply temporary service credits for individual subscribers. For example, a $100/mo subscriber may have a bad experience and is given $20 off their next bill as a goodwill gesture. We would maintain an MRR of $100 for this subscriber. Even though you will only collect $80 in this month from this subscriber, they are still valued at $100/mo. In this scenario, MRR can diverges slightly from cash flow - see our note on Financial Data below.

On the other hand, some subscribers may be comped an amount that exceeds one month’s bill. We consider this an MRR impacting event, and will adjust MRR down when the credit is applied and back up with the credit expires.

In short: partial service credits do not affect MRR, while long-term credits do affect MRR.

Annual Plans

The value of annual plans is amortized to a monthly number for MRR purposes. A subscriber to a $1200/year plan has an MRR value of $100/mo. We normalize any billing frequency to monthly for MRR purposes.

Prepayments

Sometimes a subscriber on monthly billing prepays (usually via check payment) for several months, or even several years. We assign MRR value based on the monthly value, despite the prepayment. A $100/mo subscriber who sends in a $2400 check to prepay for 2 years still has an MRR value of $100. If they were to upgrade to a $200/mo plan, this would be Expansion MRR of additional $100, pushing their value to $200/mo.

Invoice Billing

MRR is assigned to a subscription when their payment becomes due. A subscriber who signs up for your $1000/mo plan on an invoice-billing basis is counted immediately as $1000/mo in new business, even before you’ve received their check.

Components, Add-Ons, & Usage

Chargify’s flexible component system helps you address a wide-array of billing scenarios. Often, some components of your billing are considered to be part of MRR, while others are considered to be non-MRR usage.

In this release, we have set a rule-of-thumb: quantity-based components and on-off components (which maintain their value until changed) are a part of MRR, while metered components (whose usage resets to 0 each period) are exempted from MRR. (In the future, we plan to give you choices about how each of your components is treated for MRR purposes.)

Prorated Components

As mentioned above, quantity-based and on-off components are added to MRR reports. However, if a component is added in the middle of a billing period, this is not reflected in the corresponding month’s MRR report.

Example:

  • A Subscriber signs up for the Gold monthly plan in January.
  • They are allotted $100 for a mix of on/off, quantity-based and metered components
  • Their next billing date is February 15th
  • The MRR report for January will not reflect the addition of the components
  • The MRR report for February will reflect the addition of the components under New Business

FAQ

If you have any further questions that were not addressed in the content above, we encourage you to view the MRR FAQ documentation.