How do I better calculate MRR and churn if metered billing is a significant part of the price?

I think the definition of “MRR” has become corrupted in recent years.

MRR is your Montly Recurring Revenue. Plain and simple. If it doesn’t recur, it’s not part of your MRR.

But it’s still revenue, even if it doesn’t automatically recur (e.g., the metered billing part).

That’s OK. Just break it out.

E.g., if last month you had $100k in software revenue (MRR), and $100k in API-based metered billing … just tell the world:

  • you had $200k in revenue Last Month,
  • $100k was from recurring software revenue; and
  • $100k was from metered revenue.

No need to play games. Just tell everyone how much plain old revenue (GAAP) you have each month. Then break it up in the top 2–3 types. It’s fine.

And there will be a lot fewer games played, and a lot less confusion.

A bit more here: You Know What’s Even Better Than MRR? POGR. Plain Old GAAP Revenue. | SaaStr

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Published on December 27, 2018

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