MRR – ARR movements
Explore how Fincome breaks down MRR and ARR variations by customer. Identify sources of growth, contraction and churn to gain a detailed understanding of your revenue dynamics.
1. Definition of MRR movements in Fincome
One of the foundations of recurring revenue analysis in Fincome is tracking changes in MRR (Monthly Recurring Revenue). Fincome calculates the monthly MRR for each active subscription and automatically detects value changes, called MRR movements. Each movement corresponds to a net change in MRR between two periods, and adding up all past movements of a subscription allows reconstructing its current MRR.
2. The different types of MRR movements
Fincome categorizes MRR variations into different types of movements. Each of these movements describes a particular scenario of recurring revenue gain or loss for the customer concerned. The main types of MRR movements are as follows:
New : a New movement is recorded when a customer subscribes for the first time to a paid subscription. This movement reflects the arrival of new monthly recurring revenue from a customer who previously had no MRR.
Typical cases: a customer's first-ever subscription billed, or activation of a first subscription after a trial period.
Reactivation : the Reactivation movement occurs when a previously lost customer (churned customer, i.e. without any active subscription) resumes a paid subscription.
Typical cases: resuming a subscription (identical or new) after a full cancellation, or returning to a paid plan after a pause period.
Expansion (Upsell) : an Expansion movement corresponds to any net increase in MRR for an already active subscription or customer.
Typical cases: moving to a higher plan (upgrade), adding users or add-on modules, end of a commercial discount, or subscribing to an additional subscription for the same customer (cross-sell).
Contraction (Downsell) : a Contraction corresponds to a decrease in MRR on an active subscription without that subscription being completely canceled.
Typical cases: downgrading to a lower plan (downgrade), removal of users or options, application of a discount or credit, or even a partial cancellation (for example stopping a secondary subscription).
Attrition (Churn) : the Attrition movement is recorded when a customer's last subscription is canceled, causing that customer to exit the active MRR base. Fincome allows configuring the churn recognition date.
Typical cases: end of a commitment period without renewal, explicit contract cancellation by the customer, or automatic suspension for non-payment (depending on how your billing system operates).
FX (Exchange rate effect) : FX movements correspond to adjustments to MRR due to exchange rate variations for subscriptions billed in a foreign currency. The source used by Fincome for exchange rate effects is Open Exchange Rates.
Typical cases: a customer is billed in USD but your reporting is in EUR; between two periods the exchange rate fluctuates, causing a revaluation (up or down) of the converted MRR.
Net Growth (Net Movement) : net growth represents the sum of all positive and negative MRR movements of a customer (or a customer segment) over a given period. In other words, it is the total change in the customer's MRR over the period in question, taking into account all expansions and churns.
Typical cases: a customer increases an existing subscription (+€100), cancels another (–€50), and receives a one-time credit (–€20): the net growth of their MRR is therefore +€30 over the period.
Cross-sell : addition of an extra subscription concerning another product or service, for a customer who already has at least one active subscription. This is a “horizontal” growth of MRR, a customer extending their commitment to a new product without being a new customer.
Typical cases: a customer already subscribed to your SaaS billing offering also subscribes to your advanced reporting module. They remain an existing customer but generate additional MRR via a new product.
Partial churn : the inverse of cross-sell. It is the cancellation of a single subscription for a customer who had several, resulting in a loss of MRR on one product without losing the entire customer.
Typical cases: a customer cancels their premium support module but keeps their main subscription. The customer's total MRR decreases, but they are not considered churned.
Price-volume mix effect : this movement simultaneously combines a volume variation and a price variation on the same subscription. The price-volume mix effect corresponds to the portion of MRR variation resulting from the combination of the two effects (it is generally measured by the product of the price change and the simultaneous volume change). This decomposition helps quantify the combined impact of a price change accompanied by a change in quantities
Typical cases: a customer goes from 10 to 15 users (+volume), and at the same time the price per user increases from €20 to €25 (+price). The mix effect represents the combined impact of these two changes, beyond the isolated effect of each variable.
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