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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.


Note: One-time coupons are considered part of the MRR calculation if they are added to the subscription and applicable for the next renewal of the subscription, irrespective of the coupon type used.



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.

Contact support to enable Flexi MRR on your site.

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?

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 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

  1. 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

  1. 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

  1. 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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