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Flexible MRR vs. Regular MRR 

This document highlights the MRR calculation differences in Chargebee between Regular MRR and Flexible MRR.

MRR Calculation 

Regular MRR (MRR V1 version) Flexible MRR (MRR V2 version)
MRR Calculation:
The recurring components of the subscription renewal estimate (i.e. plan, addons, coupons) are used to calculate the current month's MRR.
Scheduled subscription changes for the upcoming term are not included.
Charges/Non-recurring addons, metered components, and one-time coupons are not included.



MRR Calculation:
The subscription renewal estimate is not used to calculate the current month's MRR. Instead, the current recurring components (ie. plan, addons) that are a part of the subscription are included in the current month's MRR.
Coupons (ie. one-time and recurring coupons) added to the subscription are included in the MRR calculation only when an invoice is generated with the coupon applied or a line-item reference such as unbilled charges is present.
Scheduled subscription changes for the upcoming term are not included.
Charges/Non-recurring addons and one-time coupons can be included in the MRR calculation by enabling the toggle below.


Metered plans and addons can be included by enabling the setting.

Switching to Flexible MRR 

Make note of the following before switching to Flexible MRR:

There is a difference in the way coupons/discounts are included in the MRR calculation with Flexible MRR vs Regular MRR.

Once Flexible MRR is enabled, any coupon/manual discount added to an ongoing subscription will be included in the MRR calculation only if there is a line-item reference such as an unbilled charge or an invoice with the coupon/discount applied.

For example:

Let's assume that a 10% coupon is added to an existing/ongoing subscription.

The subscription contains the following items at this step:

  • Plan - $100
  • Addon - $100 * 3
  • Coupon [Applicable Forever] - 10%

MRR Calculation:

Step 1: Recurring components of the current term (plan and addons):

$100 + $100*3 = $400

Step 2: Charges and Coupons:

Internal Checks Performed:

Does the subscription contain charges?
Does the subscription contain coupons?
What is the coupon type?
Is there a line-item reference such as unbilled charges or an invoice with the coupon applied?
No
Yes
Forever
No

The coupon is not included in the MRR calculation because there is no line-item reference such as an unbilled charge or an invoice with the applied coupon yet.

MRR: $400

Note
  • If a one-time charge is created at the subscription level, the 10% forever coupon will be applied to the invoice automatically. In this case, the condition ‘Has an invoice been generated with the coupon applied?' will be true and the MRR will be recomputed taking the coupon into consideration.
  • If charges are pushed to unbilled charges with the coupon applied before subscription renewal, the MRR will be recomputed taking the coupon into consideration here as well.
  • If neither of the above two scenarios occurs, then the coupon will be taken into account only after the subscription renews and a renewal invoice is generated with the coupon.

MRR Calculation in different scenarios 

Please refer to the ordered sequence of steps below to understand how Regular MRR and Flexible MRR are calculated in different scenarios.

Subscription Creation 

Regular MRR and Flexible MRR values are the same.

Regular MRR (MRR V1 version) Flexible MRR (MRR V2 version)
Create an active monthly subscription with the following items on Jan 1st 2022:

Plan - $100
Addon - $100
Coupon [Applicable Forever] - 50%

MRR Calculation:

Subscription Renewal Estimate for the upcoming term Feb 1st 2022 is
($100 + $100) - $100 (50%coupon) = $100

MRR: $100
Create an active monthly subscription with the following items on Jan 1st 2022:

Plan - $100
Addon - $100
Coupon [Applicable Forever] - 50%

MRR Calculation:

Step 1: Recurring components of current term (plan,addons):
$100 + $100 = $200

Step 2: Charges and Coupons:

Internal Checks Performed:
Does the subscription contain charges?
No
Does the subscription contain coupons?
Yes
What is the coupon type?
Forever
Is there a line-item reference such as unbilled charges or an invoice with the coupon applied?
Yes (ie. The first invoice). The coupon is included in the MRR calculation because an invoice was generated with the coupon applied.

$200 - $100 (50%coupon) = $100

MRR: $100

Coupon Removal 

Regular MRR and Flexible MRR values are the same.

Regular MRR (MRR V1 version) Flexible MRR (MRR V2 version)
Remove the 50% coupon from the subscription on Jan 2nd, 2021.

The subscription contains the following items at this step:

Plan - $100
Addon - $100


MRR Calculation:

Subscription Renewal Estimate for the upcoming term Feb 1st 2022 is
$100 + $100 (plan + addon) = $200

MRR: $200
Remove the 50% coupon from the subscription on Jan 2nd 2021.

The subscription contains the following items at this step:

Plan - $100
Addon - $100


MRR Calculation:

Step 1: Recurring components of current term (plan,addons):
$100 + $100 = $200

Step 2: Charges and Coupons:

Internal Checks Performed:
Does the subscription contain charges?
No
Does the subscription contain coupons?
No
MRR: $200

Subscription Update (Upon Renewal) 

Regular MRR and Flexible MRR values are the same.

Regular MRR (MRR V1 version) Flexible MRR (MRR V2 version)
Update the subscription with the following items on Jan 3rd, 2022, and schedule the changes to kick in during the upcoming subscription renewal.

Plan - $100 (same as before)
Addon - $100 * 2 (Addon quantity has increased)

MRR Calculation:

Scheduled subscription changes for the upcoming term are not included and hence the MRR remains the same.

MRR: $200
Update the subscription with the following items on Jan 3rd 2022 and schedule the changes to kick in during the upcoming subscription renewal.

Plan - $100 (same as before)
Addon - $100 * 2 (Addon quantity has increased)

MRR Calculation:

Scheduled subscription changes for the upcoming term are not included and hence the MRR remains the same.

MRR: $200
Subscription Renewal
Regular MRR and Flexible MRR values are the same.
Let the subscription automatically renew on Feb 1st, 2022.

The subscription contains the following items at this step:

Plan - $100
Addon - $100 * 2


MRR Calculation:

Subscription Renewal Estimate for the upcoming term March 1st 2022 is
($100 + $100*2) = $300

MRR: $300





Let the subscription automatically renew on Feb 1st, 2022.


The subscription currently contains the following items at this step:

Plan - $100
Addon - $100 * 2


MRR Calculation:

Step 1: Recurring components of current term (plan,addons):
$100 + $100*2 = $300

Step 2: Charges and Coupons:

Internal Checks Performed:
Does the subscription contain charges?
No
Does the subscription contain coupons?
No
MRR: $300

Subscription Update (Immediately) 

Regular MRR and Flexible MRR values are the same.

Regular MRR (MRR V1 version) Flexible MRR (MRR V2 version)
Update the subscription with the following items on Feb 3rd, 2022, and apply the changes immediately.

Plan - $100 (same as before)
Addon - $100 * 3 (Addon quantity has increased)

MRR Calculation:

Subscription Renewal Estimate for the upcoming term March 1st, 2022 is
($100 + $100*3) = $400

MRR: $400
Update the subscription with the following items on Feb 3rd, 2022 and apply the changes immediately.

Plan - $100 (same as before)
Addon - $100 * 3 (Addon quantity has increased)



MRR Calculation:

Step 1: Recurring components of current term (plan,addons):
$100 + $100*3 = $400

Step 2: Charges and Coupons:

Internal Checks Performed:
Does the subscription contain charges?
No
Does the subscription contain coupons?
No
MRR: $400

Add Coupon (Immediately) 

Regular MRR and Flexible MRR have different values.

Flexible MRR (MRR V2 version)
Add a 10% coupon to the subscription and apply the changes immediately.

The subscription contains the following items at this step:

Plan - $100
Addon - $100 * 3
Coupon [Applicable Forever] - 10%


MRR Calculation:

Subscription Renewal Estimate for the upcoming term March 1st 2022 is
($100 + $100 *3) - 40 (10%coupon) = $360

MRR: $360
Add a 10% coupon to the subscription and apply the changes immediately.

The subscription contains the following items at this step:

Plan - $100
Addon - $100 * 3
Coupon [Applicable Forever] - 10%



MRR Calculation:

Step 1: Recurring components of current term (plan,addons):
$100 + $100*3 = $400

Step 2: Charges and Coupons:

Internal Checks Performed:
Does the subscription contain charges?
No
Does the subscription contain coupons?
Yes
What is the coupon type?
Forever
Is there a line-item reference such as unbilled charges or an invoice with the coupon applied?
No, the coupon is not included in the MRR calculation because there is no line-item reference such as unbilled charges or an invoice with the coupon applied.
MRR: $400
Note:
If a one-time charge is created at the subscription level, the 10% forever coupon will be applied to the invoice automatically. In this case, the condition ‘Is there a line-item reference such as unbilled charges or has an invoice been generated with the coupon applied?' will be true and the MRR will be recomputed taking the coupon into consideration.
If charges are pushed to unbilled charges with the coupon applied before subscription renewal, the MRR will be recomputed taking the coupon into consideration here as well.
If neither of the above two scenarios occurs, then the coupon will be taken into account only after the subscription renews and a renewal invoice is generated with the coupon.

Limitations of Regular MRR 

Regular MRR (MRR V1 version) Flexible MRR (MRR V2 version)
Limitation 1:

Example:
Create a monthly subscription with a duration-specific coupon on Jan 1st, 2022.
Plan - $100
Coupon [2 months] - 50%
The MRR for the first subscription term (ie. Jan 1st to Feb 1st) will include the coupon.
MRR: $100 - $50 = $50
The MRR for the second subscription term (ie. Feb 1st to March 1st) will not include the coupon.
MRR: $100

MRR Calculation for the second term:
Subscription Renewal Estimate for the upcoming term March 1st, 2022 will not include the coupon because the coupon's applicability is only for 2 months.
The above limitation applies to all duration-specific coupons.
This limitation is solved with Flexible MRR.
Limitation 2:
Example:
Create a monthly subscription with an addon with a specific number of billing cycles on Jan 1st, 2022.
Plan - $100
Addon [2 billing cycles] - $100
The MRR for the first subscription term (ie. Jan 1st to Feb 1st) will include the addon.
MRR: $100 + $100 = $200
The MRR for the second subscription term (ie. Feb 1st to March 1st) will not include the addon.
MRR: $100

MRR Calculation for the second term:
Subscription Renewal Estimate for the upcoming term March 1st, 2022 will not include the addon because the addon's applicability is only for 2 billing cycles.
The above limitation applies to all addons with a specific number of billing cycles.
This limitation is solved with Flexible MRR.

Flexible MRR Configuration 

Considering that the below two settings are enabled, please refer to the ordered sequence of steps below to understand how Regular MRR and Flexible MRR are calculated in different scenarios.

Regular MRR (MRR V1 version) Flexible MRR (MRR V2 version)
Subscription Creation:
Regular MRR and Flexible MRR have different values.
Create an active monthly subscription with the following items on Jan 1st 2022:

Plan - $100
Addon - $100
Charge (on subscription creation) - $100

MRR Calculation:

Subscription Renewal Estimate for the upcoming term Feb 1st 2022 is
$100 + $100= $200

Charges are not included in the MRR calculation.

MRR: $200
Create an active monthly subscription with the following items on Jan 1st 2022:

Plan - $100
Addon - $100
Charge (on subscription creation) - $100

MRR Calculation:

Step 1: Recurring components of current term (plan,addons):
$100 + $100 = $200

Step 2: Charges and Coupons:

Internal Checks Performed:
Does the subscription contain charges?
Yes
Is it an event-based charge?
Yes
Is the event-based charge applicable for the current term?
Yes
Has an invoice been generated with a one-time charge (via Add Charge) in the current term?
No
Note:Quick charges are not included in the Flexible MRR calculation.
Does the subscription contain coupons?
No

$200 + $100 = $300
MRR: $300
2. Add a one-time coupon:
Regular MRR and Flexible MRR have different values.
Add a 10% one-time coupon to the subscription.

The subscription contains the following items at this step:

Plan - $100
Addon - $100
Charge (on subscription creation) - $100
Coupon (one-time) - 10%


MRR Calculation:

Subscription Renewal Estimate for the upcoming term Feb 1st 2022 is
$100 + $100= $200

Charges and one-time coupons are not included in the MRR calculation.

MRR: $200
Add a 10% one-time coupon to the subscription.

The subscription contains the following items at this step:

Plan - $100
Addon - $100
Charge (on subscription creation) - $100
Coupon (one-time) - 10%



MRR Calculation:

Step 1: Recurring components of current term (plan,addons):
$100 + $100 = $200

Step 2: Charges and Coupons:

Internal Checks Performed:
Does the subscription contain charges?
Yes
Is it an event-based charge?
Yes
Is the event-based charge applicable for the current term?
Yes
Has an invoice been generated with a one-time charge (via Add Charge) in the current term?
No
Note:Quick charges are not included in the Flexible MRR calculation.
Does the subscription contain coupons?
Yes
What is the coupon type?
One-time
Is there a line-item reference such as unbilled charges or an invoice with the coupon applied?
No, the charge will be taken into consideration but the coupon won't be included.
MRR: $300
3. Subscription Renewal:
Regular MRR and Flexible MRR have different values.
The subscription contains the following items at this step:

Plan - $100
Addon - $100
Charge (on subscription creation) - $100
Coupon (one-time) - 10%


MRR Calculation:

Subscription Renewal Estimate for the upcoming term Feb 1st 2022 is
$100 + $100= $200

Charges and one-time coupons are not included in the MRR calculation.

MRR: $200
The subscription contains the following items at this step:

Plan - $100
Addon - $100
Charge (on subscription creation) - $100
Coupon (one-time) - 10%



MRR Calculation:

Step 1: Recurring components of current term (plan,addons):
$100 + $100 = $200

Step 2: Charges and Coupons:

Internal Checks Performed:
Does the subscription contain charges?
Yes
Is it an event-based charge?
Yes
Is the event-based charge applicable for the current term?
No
Has an invoice been generated with a one-time charge (via Add Charge) in the current term?
No
Note:Quick charges are not included in the Flexible MRR calculation.
Does the subscription contain coupons?
Yes
What is the coupon type?
One-time
Is there a line-item reference such as unbilled charges or an invoice with the coupon applied?
Yes, the charge will not be taken into consideration because it is not applicable for the current term but the coupon will be included because the renewal invoice has the coupon applied.

($100 + $100) - 20 (10%coupon) = $180

MRR: $180
4. Add Charge to the subscription:
Regular MRR and Flexible MRR have different values.
Add a one-time charge to the subscription using the ‘Add Charge' button.

Plan - $100
Addon - $100
Charge 1 (on subscription creation) - $100
Charge 2 - $100


MRR Calculation:

Subscription Renewal Estimate for the upcoming term Feb 1st 2022 is
$100 + $100= $200

Charges and one-time coupons are not included in the MRR calculation.

MRR: $200
Add a one-time charge to the subscription using the ‘Add Charge' button.

Plan - $100
Addon - $100
Charge 1 (on subscription creation) - $100
Charge 2 - $100
Coupon - 10%



MRR Calculation:

Step 1: Recurring components of current term (plan,addons):
$100 + $100 = $200

Step 2: Charges and Coupons:

Internal Checks Performed:

Charge 1 (Event-based Charge):
Does the subscription contain charges?
Yes
Is it an event-based charge?
Yes
Is the event-based charge applicable for the current term?
No
Charge 2 (via Add Charge):
Has an invoice been generated with a one-time charge (via Add Charge) in the current term?
Yes
Does the subscription contain coupons?
No
Note:Quick charges are not included in the Flexible MRR calculation.
Charge 1 will not be taken into consideration because it is not applicable for the current term.
Charge 2 will be taken into consideration and the coupon will be taken into consideration because an invoice was generated for the current term with the coupon applied.

($100 + $100 +$100) - 30 (10%coupon) = $270

MRR: $270

Including Metered Plans and Addons in the MRR Calculation 

This feature is built on top of Flexible MRR. As a prerequisite, Flexible MRR has to be enabled prior to enabling the toggle below. However, enabling the toggles under the Flexible MRR settings is optional.

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