Monthly recurring revenue (MRR) is a key metric for subscription businesses and represents the Monthly Recurring Revenue for a subscription, order, or charge. The MRR calculates subscription fees normalized to a monthly value, and does not include one-time or usage fees.
The MRR is calculated based on the Monthly Recurring Charges (MRC) for a subscription, which are the charges that a customer pays every month. For example:
- The MRR for a period of one month is taken as is.
- The MRR for a period of one quarter is the entire period's recurring revenue divided by 3.
- The MRR for one semi-annual period is the entire period's recurring revenue divided by 6.
- The MRR for one annual period is the entire period's recurring revenue divided by 12.
To calculate the MRR for a particular customer, add up all the MRC for that customer.
To calculate total MRR, add up all MRC for all customers.
The MRR can change over time if there are any changes to the subscription during its life cycle. For example, if the customer adds a product to their existing subscription, their MRC (and subsequently their MRR, which is calculated from MRC) increases from that point forward (for the subsequent months of their subscription).
Discount charges are not part of the MRR calculation due to the uncertain variables in discounts. For example, let's say that you are applying a 100% discount. You set the discount to be applicable for the first three months of a twelve-month term. The calculation can't set the MRR to 0: it's still the original MRR for the remaining nine months.
Because there are too many variables associated with discount charges, discounts are outside of the booking metrics of MRR and TCV (total contract value).
Differences Between Today's MRR and Contracted MRR
Today’s MRR represents the current monthly recurring revenue as of today’s date. Today’s MRR does not account for future upgrades, downgrades, up sells, or cancellations.
Contracted MRR is the future expected MRR that accounts for future upgrades, downgrades, upsells and cancellations.
Calculating Today's MRR
Export MRR from Subscriptions
- Download the
SubscriptionDetails export file. Navigate to Customers > Subscriptions in the left-hand navigation section.
- Click Export Subscriptions, located under Action on the right.
- Click OK to open the zip file containing an export file named
- Click the
SubsriptionDetails file to open it.
- Save the file as a Microsoft Excel document. The
SubscriptionDetails export file provides the MRC value for each subscription in column S, "MRR." These values are used to calculate MRR.
- Filter the Excel worksheet by date as follows:
- In column U, "Effective Start Date," use the custom filter to include charges where Effective Start Date "is before or equal to” today’s date."
- In column W, "Effective End Date," use the custom filter to include charges where Effective End Date "is after or equal to" today’s date. Because MRR can change over time, if there are any changes to the subscription during the subscription’s life cycle, you can use date filters to selectively report on the MRR within a specific date range.
- In column F, "Subscription Status," use the custom filter to include only
Cancelled subscriptions. You must include cancelled subscriptions because a subscription that has been cancelled with a Cancellation Date in the future is still generating revenue as of today. Subscriptions with other statuses have either stopped billing or have not begun billing, and therefore should not be included in MRR calculations.
- Sum up the monthly recurring charges (MRC) to compute the MRR. To calculate MRR for a single customer account, select the applicable customer account by using the custom filters in column C, "Customer Account." Then sum up all MRC for the account.
- To calculate total MRR (for all customer accounts), leave column C, "Customer Account," as-is (without filtering) and sum up all MRC.
Calculating Contracted MRR
To calculate contracted MRR:
- Create a data export
- Filter the exported data and compute MRR
Do not filter the status by
Active subscriptions. Contracted MRR includes all future upgrades, downgrades, up sells, and cancelations.
Create a Data Export
To create a data export:
- Navigate to Reporting > Data Sources in the left-hand navigation section.
- Select Rate Plan Charge as your base object in the Data Source drop-down list.
- Select the following fields from the base object:
- Effective End Date
- Effective Start Date
- End Date Condition
- Is Last Segment
- Select the following related data sources and fields from the data source tree:
|Data Source ||Field |
|Account || |
|Rate Plan ||Amendment Type |
|Subscription ||Status |
- Select a file format: CSV or CSV ZIP (a zipped CSV file).
- Click export.
See Generate a Data Source Export for more information.
Filter the Exported Data and Compute MRR
To filter the exported data and get the value of the contracted MRR:
- Click the file you just created to open it.
- Save the file as a Microsoft Excel document.
- Filter the Excel worksheet with the following steps:
- In the "Rate Plan: Amendment Type" column, use the custom filter to exclude "Remove a Product" value.
- In the "Rate Plan Charge: End Date Condition" column, use the custom filter to only include the "Align to Subscription End Date" value and the empty value.
- In the "Rate Plan Charge: Is Last Segment" column, use the custom filter to only include the "TRUE" value.
- In the "Subscription: Status" column, use the custom filter to exclude the "Draft", "Cancel", "Expired" values.
- In the "Subscription: Term Type" column:
- If the value is "TERMED", exclude the empty value of the "Rate Plan Charge: Effective End Date" and the "Rate Plan Charge: Effective Start Date" columns.
- If the value is "EVERGREEN", exclude the empty value of the "Rate Plan Charge: Effective Start Date" column.
- Sum up the values of the "Rate Plan Charge: MRR" column to compute the MRR.
- To calculate contracted MRR for a single customer account, select the applicable customer account by using the custom filters. Then sum up all the values of the "Rate Plan Charge: MRR" column for the account.
- To calculate contracted MRR for all customer accounts, leave the "Account: Name" column without filtering and sum up all the values of the "Rate Plan Charge: MRR" column.