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.

One of the foundations of recurring revenue analysis in Fincome is based on tracking MRR (Monthly Recurring Revenue) changes.

Fincome calculates the monthly MRR of each active subscription and automatically detects value changes, called MRR movements. Each movement corresponds to a net change in MRR between two periods, and the sum of all past movements of a subscription allows reconstructing its current MRR.

These movements are analyzed in two complementary views:

• “customer-level” view : MRR evolution by customer (historical base of the module).

• “product-level” view : decomposition of MRR by product allowing distinction of upsell with price, volume and mix effects, from cross-sell, and conversely for downsells.

1. MRR Movements – customer-level

This view allows you to identify the main dynamics of your recurring revenue at the customer level. It groups all types of movements that affect your overall MRR: new customers, expansions, contractions, churns, etc.

• New (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 subscription who has never been billed, or the activation of a first subscription after a trial period.

• Reactivation : the Reactivation movement occurs when a previously lost customer (churned customer, i.e., with no active subscription) resumes a paid subscription.

Typical cases: resuming a subscription (identical or new) after a complete 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 tier (upgrade), adding users or add-on modules, the 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 cancelled.

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).

Note : discounts or credits applied retroactively may generate a dated contraction in the relevant period, depending on the revenue recognition settings defined in Fincome

• Attrition (Churn) : the Attrition movement is recorded when a customer’s last subscription is cancelled, causing that customer to exit the active MRR base. Fincome allows configuring the recognition date of this churn.

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 functions).

• FX (Exchange rate effect) : FX movements correspond to MRR adjustments 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 considered, once all expansions and churns have been taken into account.

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.

2- MRR Movements – product-level

This second view introduces a decomposition at the product level, ideal for understanding the economic drivers of your growth: price effect, volume effect and mix effect.

Fincome distinguishes the following movements there (in addition to those listed above, but at the product level):

• Upsell – price effect : increase in MRR due to a rise in unit price, without change in volume. This movement reflects a revenue gain related to a pricing adjustment rather than a usage change.

Typical cases: a customer moves from a €20 plan to €25 per user; a temporary discount ends; new pricing is applied to an equivalent contract.

• Upsell – volume effect : increase in MRR linked to a rise in quantities consumed or subscribed, at constant unit price. This movement indicates a natural expansion of product usage.

Typical cases: a customer adds new users to their existing plan; they enable more modules; the billed volume increases (more events, operations, etc.).

• Downsell – price effect : decrease in MRR due to a drop in unit price, without volume change. This movement reflects a revenue loss related to a pricing adjustment.

Typical cases: a customer benefits from a commercial discount; they move to a lower pricing tier while keeping the same number of users; the unit price is reduced at renewal.

• Downsell – volume effect : decrease in MRR linked to a reduction in volumes or scope of use, at constant unit price. This movement reflects reduced usage or a contract adjustment.

Typical cases: a customer removes licenses; they deactivate modules; the billed volume decreases due to lower service usage.

• Cross-sell : addition of an extra subscription for 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 engagement 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 through a new product.

• Product downsell : the inverse of cross-sell. It is the cancellation of a single subscription for a customer who had several, causing 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 change and a price change 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 simultaneous price change and 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.