Playing by the Rules, or Metrics

Recurring Monthly Revenue, almost always referred as RMR, is probably the most important metric of any subscription business. It is what makes this business model so great. Once you acquire a new customer you have recurring revenue, which means you don’t have to worry about one-off sales every month. Different from traditional sales, it gives you new challenges such as retention and churn.

The general concept is that RMR is a measure of the predicable and recurring revenue components of your subscription business. It will typically exclude one-time and variable fees, but for month-to-month businesses it would include such items.

You might think that if you acquire more customers your RMR would grow, right? That’s true, but that’s not the only aspect to be considered on a subscription business model.

The metrics of tracking and reporting recurring monthly revenue is evolving. Okay, what isn’t evolving in this day and age? Our cover story is words of wisdom to the dealers, who need to embrace consistent account management practices and software powerful enough to get the necessary information.

Scott MacDougal spells it all out in the cover story when he writes about new metrics of tracking. The first thing he does as a professional is to have the dealer break down RMR. Powerful software makes this process a little easier, and there are several key ingredients to keep in mind while breaking down the numbers.

First of all, define what your RMR really might be. Look at how you code things in your system, and make sure you understand what has value. Not everything has value.

MacDougal also takes a refreshing look at the Counts vs. the Dollars. Dollars are most important but counts can be useful to help establish averages. Good software aimed at accounting methods can provide the dealer with a quick look at summaries and trends. Who wouldn’t want to know ahead of time the direction of accounting and trends?

To analyze RMR, you might want to consider three different aspects.

New RMR. This is the simply new revenue brought by brand new customers acquired. So let’s say you have acquired on a given month five new customers paying $100/month and two new customers paying $200/month. Your New MRR for that month would be $900.

Expansion RMR. Now imagine that you have three customers that upgrade their plans from $100/month to $200/month. That means you have expanded your revenue from existing customers, called Expansion RMR. Your Expansion MRR for that month would be $300. Keep in mind that Expansion RMR can come from upselling.

Churn MRR. You should also consider churn. Churn RMR is the revenue that has been lost from customers cancelling or downgrading their plans. So let’s say on a given month you had two cancellations of $100/month plans and other three customers downgraded their plans from $200/month to $100/month. You Churn MRR would be $500. It simply means that you’ll have minus $500 on recurring revenue for next month. Keep in mind that MRR churn is different from customer churn.

This article originally appeared in the March 2018 issue of Security Today.

About the Author

Ralph C. Jensen is the Publisher of Security Today magazine.

Featured

  • From the Most Visible to the Less Apparent

    The Cybersecurity and Infrastructure Security Agency (CISA) states “There are 16 critical infrastructure sectors whose assets, systems, and networks, whether physical or virtual, are considered so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, and national public health or safety or any combination thereof.” Read Now

  • Work Anywhere, Secure Everywhere: 2025 Tech Predictions

    Five years after the pandemic, organizations need a flexible work reset to stay productive and support any work arrangement. Despite the pandemic-fueled workplace shift that began five years ago, companies across industries and geographies continue to increase flexible work configurations. However, many tools adopted during COVID onset remain in place today, and they now need a reset to keep employees productive and secure regardless of location. Security leaders must re-evaluate existing practices and reinvest in zero trust security, passwordless environments, and automation adoption to improve efficiency and productivity. Read Now

  • Guiding Principles

    Construction sites represent a unique sector of perimeter security, especially amidst a steady increase in commercial construction. As in any security environment, assessing weaknesses and threats remains paramount and modern technology, coupled with sound access control principles, are critical in addressing vulnerabilities at even the most secure construction sites around the world. Read Now

  • Empowering 911

    In the wake of the tragic murder of UnitedHealth Group CEO Brian Thompson, media coverage flooded the airwaves with images, videos and detailed timelines of the suspect’s movements. While such post-incident analysis is not new, today’s 911 centers now have access to similar data in real-time. This technological evolution marks a pivotal transformation in emergency response, transitioning from analog calls to a digital ecosystem capable of saving more lives. Read Now

Most   Popular

New Products

  • Unified VMS

    AxxonSoft introduces version 2.0 of the Axxon One VMS. The new release features integrations with various physical security systems, making Axxon One a unified VMS. Other enhancements include new AI video analytics and intelligent search functions, hardened cybersecurity, usability and performance improvements, and expanded cloud capabilities

  • AC Nio

    AC Nio

    Aiphone, a leading international manufacturer of intercom, access control, and emergency communication products, has introduced the AC Nio, its access control management software, an important addition to its new line of access control solutions.

  • Hanwha QNO-7012R

    Hanwha QNO-7012R

    The Q Series cameras are equipped with an Open Platform chipset for easy and seamless integration with third-party systems and solutions, and analog video output (CVBS) support for easy camera positioning during installation. A suite of on-board intelligent video analytics covers tampering, directional/virtual line detection, defocus detection, enter/exit, and motion detection.