The Subscription Metrics Report tracks data related to subscription-based products over a given time period. Learn about MRR, ARPU, and Churn and how to read the Subscription Metrics Report to keep track of your subscription-based products!
In this article:
- Monthly Recurring Revenue:
- Average Revenue Per User:
To view your Subscription Metrics Reports:
- Open the Website tab from your dashboard and select Analytics.
- Click View in the Subscription Metrics box from the analytics dashboard.
Monthly Recurring Revenue:
What is MRR and who is it important to?
MRR, or Monthly Recurring Revenue, is all of your recurring revenue normalized into a monthly amount.
This report is vital for subscription businesses because revenue and profits trickle in over time. So, it's important to measure growth and revenue in a similar way. MRR provides an easy way to forecast future cash flows.
How to calculate MRR?
The best way to calculate MRR is to obtain the average monthly subscription multiplied by the number of subscription payments minus any subscription discounts.
MRR = All subscriptions * ((monthly average subscription * number of subscription payments) - subscription discounts))
MRR = Total Monthly Subscription Revenue - Monthly Discounts
For instance, if you have Customer A paying $150/monthly and Customer B paying $200/monthly, your MRR would be $350.
Average Revenue Per User:
What is ARPU?
ARPU, or Average Revenue Per User, is especially useful if you have a business with multiple tiers of subscriptions.
For example, if you have a 3 tiered subscription model where your plans start from $10 to $50 and $80 understanding ARPU will help you make pricing decisions and understand if your type of customer skews towards higher or lower pricing plans.
How is ARPU calculated?
MRR ÷ Active Customers = ARPU
Strategies to increase and optimize ARPU?
- Have a clear add-on or upgrades strategy
- Focus on retention
What is Churn?
Churn is a business metric that calculates the number of customers who leave a business or stop paying over a given period of time. Customer churn is important to understand the health and retention of your business.
Churn Rate Formula
The Churn Rate Formula can be calculated as the number of churned divided by the total number of customers:
Churn rate = (number of churned customers / total number of customers) 100
The Forecast tool empowers you to predict and plan for the future of your business by projecting your MRR, ARPU, New Subscriptions, and Churn Rate over the next 6 months. Now you can set tangible, subscription-based goals according to your business needs all within Kajabi.
The default value for your Starting MRR is your current MRR data from the last month. Enter a new Starting MRR to visualize the MRR you want to hit your goals in a 6-month time frame.
The default value for your Starting ARPU is your current ARPU data from the last month. Enter a new Starting ARPU to estimate the ARPU you need to reach your future income goals in a 6-month time frame.
This field represents the number of monthly new subscriptions. The default value is based on your current number of new subscriptions from the last month. Adjust this variable to strategize your monthly new subscription targets to meet your MRR goals in a 6-month time frame.
This field is the rate of churned subscriptions or canceled subscriptions that are estimated each month of the Forecast. The default value is based on your current churn from the last month. Adjust your Churned Subscriptions value to strategize your 6-months and visualize how a change in your Churned Subscriptions can impact your growth trajectory.
Adjust the MRR, ARPU, New Subscriptions, and Churned Subscriptions values and watch as your 6 Month MRR automatically adjusts to reflect your 6-month projection.
- The Blue bar in your Forecast tool represents your custom MRR according to your custom values.
- The Grey bar in your Forecast tool reflects your current MRR based on your last month.
Keep an eye on your Dynamic Forecast Statement as well! Your Dynamic Forecast Statement located above the graph will change according to your custom values.
Use your Forecast tool to clarify your goals and identify your action plans to achieve those goals.