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

  • Survey: 54% of Organizations Cite Technical Debt as Top Hurdle to Identity System Modernization

    Modernizing identity systems is proving difficult for organizations due to two key challenges: decades of accumulated Identity and Access Management (IAM) technical debt and the complexity of managing access across multiple identity providers (IDPs). These findings come from the new Strata Identity-commissioned report, State of Multi-Cloud Identity: Insights and Trends for 2025. The report, based on survey data from the Cloud Security Alliance (CSA), highlights trends and challenges in securing cloud environments. The CSA is the world’s leading organization dedicated to defining standards, certifications, and best practices to help ensure a secure cloud computing environment. Read Now

  • Study: Only 35 Percent of Companies Include Cybersecurity Teams When Implementing AI

    Only 35 percent of cybersecurity professionals or teams are involved in the development of policy governing the use of AI technology in their enterprise, and nearly half (45 percent) report no involvement in the development, onboarding, or implementation of AI solutions, according to the recently released 2024 State of Cybersecurity survey report from ISACA, a global professional association advancing trust in technology. Read Now

  • New Report Series Highlights E-Commerce Threats, Fraud Against Retailers

    Trustwave, a cybersecurity and managed security services provider, recently released a series of reports detailing the threats facing the retail sector, marking the second year of its ongoing research into these critical security issues. Read Now

  • Stay Secure in 2024: Updated Cybersecurity Tips for the Office and at Home

    Cyber criminals get more inventive every year. Cybersecurity threats continue to evolve and are a moving target for business owners in 2024. Companies large and small need to employ cybersecurity best practices throughout their organization. That includes security integrators, manufacturers, and end users. Read Now

Featured Cybersecurity

Webinars

New Products

  • Compact IP Video Intercom

    Viking’s X-205 Series of intercoms provide HD IP video and two-way voice communication - all wrapped up in an attractive compact chassis. 3

  • PE80 Series

    PE80 Series by SARGENT / ED4000/PED5000 Series by Corbin Russwin

    ASSA ABLOY, a global leader in access solutions, has announced the launch of two next generation exit devices from long-standing leaders in the premium exit device market: the PE80 Series by SARGENT and the PED4000/PED5000 Series by Corbin Russwin. These new exit devices boast industry-first features that are specifically designed to provide enhanced safety, security and convenience, setting new standards for exit solutions. The SARGENT PE80 and Corbin Russwin PED4000/PED5000 Series exit devices are engineered to meet the ever-evolving needs of modern buildings. Featuring the high strength, security and durability that ASSA ABLOY is known for, the new exit devices deliver several innovative, industry-first features in addition to elegant design finishes for every opening. 3

  • Camden CV-7600 High Security Card Readers

    Camden CV-7600 High Security Card Readers

    Camden Door Controls has relaunched its CV-7600 card readers in response to growing market demand for a more secure alternative to standard proximity credentials that can be easily cloned. CV-7600 readers support MIFARE DESFire EV1 & EV2 encryption technology credentials, making them virtually clone-proof and highly secure. 3