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MRR higher than revenue

  • 29 July 2021
  • 2 replies
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Hello,

 

In the recent months, I notice on my main dashboard that my MRR is higher than my revenue (last 28 days).


How does that work? I thought MRR should never be higher than monthly revenue.

Cheers!

 

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Best answer by sharif 29 July 2021, 23:12

While MRR and revenue often line up, they are fundamentally different metrics, so they can diverge significantly in some cases, especially when the subscription durations are much longer or shorter than one month and when your app is undergoing rapid expansion or contraction. MRR is amortized revenue over 28 days, while revenue is just purchases minus refunds.

Here’s an example: a weekly subscription purchased for $2.99 will show as $11.96 MRR (2.99/7*28). But the revenue from that subscription is still $2.99.

MRR is designed to smooth out spikes and dips so you can see more generally how your revenue is trending. That means you should focus less on the actual numbers and more on the direction of the metric. That’s unlike revenue, where you mostly focus on the exact numbers.

We have a blog post that explains the formula behind our calculation of MRR.

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While MRR and revenue often line up, they are fundamentally different metrics, so they can diverge significantly in some cases, especially when the subscription durations are much longer or shorter than one month and when your app is undergoing rapid expansion or contraction. MRR is amortized revenue over 28 days, while revenue is just purchases minus refunds.

Here’s an example: a weekly subscription purchased for $2.99 will show as $11.96 MRR (2.99/7*28). But the revenue from that subscription is still $2.99.

MRR is designed to smooth out spikes and dips so you can see more generally how your revenue is trending. That means you should focus less on the actual numbers and more on the direction of the metric. That’s unlike revenue, where you mostly focus on the exact numbers.

We have a blog post that explains the formula behind our calculation of MRR.

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Thanks Sharif! :) I understand why it might be higher if there is a weekly subscription just as you described. However, I don’t have weekly subscriptions. So I can’t think of or visualise another scenario where MRR can be higher than monthly revenue.

It would be super helpful if there is another scenario/example that you can draw out.

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