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If your ARR is built upon the idea that your customers cannot cancel their subscription, you're getting it very wrong.
by yoavm 1y ago
If your ARR is built upon the idea that your customers cannot cancel their subscription, you're getting it very wrong.
- arnon 1y agoARR assumes customers will stay with you - that's why it's a bad metric.
- bryanlarsen 1y agoThe churn rate is always part of ARR financial models. They generally do assume that the churn rate stays constant, but not that it is 0.
- quentindanjou 1y agoARR is a metric. It does not assume anything. The people using it assume, and that's where the mistake is. Most of the monthly subscriptions currently allow you to cancel at any time. And most of the yearly plans are actually "yearly-prepaid", and this isn't affected (per my understanding) by this law. What is actually impacted are plans like the Adobe year plan, where you pay monthly for a service and cannot cancel unless you pay for the amount remaining of the year. ARR isn't dead, at all. ARR of the current year was always a predicted metric, subject to plenty of factors such as payment refused on peoples cards. Maybe some businesses were not correctly using this metric and now will have to be more careful.