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There's no formal definition of MRR. Do you count transactions refunded as fraud after the fact? What about transactions that were partially refunded by your su

There's no formal definition of MRR. Do you count transactions refunded as fraud after the fact? What about transactions that were partially refunded by your support team? What month do transactions that take more than one day to settle fall in? Of course that needs to be timezone-adjusted as well. What about the case where recurring transactions fall on the 30th and 31st of each month? They'll be processed on the last day of the month, including February 28. But depending on your time zone, they might actually happen on the first of the subsequent month in _your_ time zone. You could instead sum up recurring subscription amounts. Do you count trials? What about users who have credit or a balance on their customer object? Are you counting users whose subscription is set to expire at the end of the billing period, but who have already paid for the month? If you ask 20 people how they should be calculating MRR, you'll probably get at least 10 different answers that produce 10 different numbers. That's why Stripe doesn't offer this as an API.

Zenzero 2y ago
Much of this would be solved if you specified whether you used cash or accrual basis
- jjeaff 2y ago
  Regardless of how you do your accounting, MRR is always an accrual basis. Someone who pays $10 monthly increases your MRR by $10. Someone else who pays $100 annually increases your MRR by $100/12.
jjeaff 2y ago
I don't think it's quite so subjective. At least, the edge cases you bring up would not significantly affect your metrics no matter how you handled them. MRR is a metric used for strategic planning and evaluation, it doesn't have to be exact, it's not going on your tax submissions. You usually track MRR based on users who are currently paying for your service (summing recurring subscription amounts, as you put it). Whether their payment falls at the end of the month or is delayed a day to the next month doesn't affect MRR. Most subscriptions must be paid before the billing period begins. Things like cancellations or chargebacks are counted separately and would not affect past MRR calculations. No you never count free trials. Yes, you count people who have a credit or balance assuming they overpaid to get that balance. If it was just given as a comp, then no. Yes, you count people who are set to expire until they actually expire and don't renew.

Zenzero 2y ago

Much of this would be solved if you specified whether you used cash or accrual basis

jjeaff 2y ago
Regardless of how you do your accounting, MRR is always an accrual basis. Someone who pays $10 monthly increases your MRR by $10. Someone else who pays $100 annually increases your MRR by $100/12.

jjeaff 2y ago

I don't think it's quite so subjective. At least, the edge cases you bring up would not significantly affect your metrics no matter how you handled them. MRR is a metric used for strategic planning and evaluation, it doesn't have to be exact, it's not going on your tax submissions. You usually track MRR based on users who are currently paying for your service (summing recurring subscription amounts, as you put it). Whether their payment falls at the end of the month or is delayed a day to the next month doesn't affect MRR. Most subscriptions must be paid before the billing period begins. Things like cancellations or chargebacks are counted separately and would not affect past MRR calculations. No you never count free trials. Yes, you count people who have a credit or balance assuming they overpaid to get that balance. If it was just given as a comp, then no. Yes, you count people who are set to expire until they actually expire and don't renew.