How MRR Schedules Work

MRR Schedules track the monthly recurring revenue (MRR) related to a Subscription. Specifically, the MRR Start Date and MRR End Date define the months for which MRR Schedules exist on the Subscription.

MRR Schedules are created when products from both won and pipeline opportunities are linked to a Subscription.

Both renewable and evergreen products on Subscriptions have MRR Schedules. However, there are some differences in how these work, so let’s deal with each separately.

Let’s begin with renewal products.

MRR Schedules on renewable products

Remember, customers buy renewable products for a fixed term. For example, the subscription lasts 12, 24, or 36 months.

Let’s assume a customer is buying a product for the first time. When a user adds a product to the pipeline opportunity, she enters the Start Date and # Periods. The app automatically calculates the End Date based on these two parameters.

As this is a pipeline opportunity, and the customer hasn’t previously purchased this product, the app creates a Subscription.

The Start Date and End Date are blank because the opportunity is in the pipeline stage. These fields define the period the customer can access the product or service and are populated when the opportunity is won.

However, the MRR Start Date and MRR End Date are populated because MRR Schedules are created for both pipeline and won opportunities.

As a result, the app creates MRR Schedules every month between the MRR Start Date and the MRR End Date.

For example, let’s say we have a pipeline opportunity for a customer to purchase a warranty subscription for 12 months, and the Start Date on the opportunity product is January 1, 2024. The customer plans to purchase the product for twelve months, so the End Date on the opportunity product is December 31, 2024.

The Start Date and End Date on the Subscription are blank because it’s a pipeline opportunity. However, the MRR Start Date and MRR End Date on the Subscription are populated as January 1 and December 31, 2024. This means the app creates twelve monthly MRR Schedules between these dates.

You can see in this image that the MRR Schedules have a Type of Pipeline. This will change when we win the opportunity. This is explained in the article MRR Schedule Types and Metrics.

Let’s discuss what happens when you win the deal and a renewal opportunity is created.

How MRR Schedule records are updated by renewal opportunities

When we set our opportunity to closed won, a renewal opportunity is automatically created. The renewal opportunity will have the same opportunity product as our originating opportunity.

The Start Date and End Date on the Subscription are January 1, 2024 and December 31, 2024. However, the renewal opportunity product Start and End Dates are January 1 and December 31, 2025. In other words, for the twelve months following the subscription period.

The MRR Start Date on the Subscription remains the same (January 1, 2024). That’s because the MRR Start Date reflects the earliest date we want to track revenue. In this case, the earliest date relates to the originating rather than the renewal opportunity.

In contrast, the MRR End Date on the Subscription moves to December 31, 2025. That’s because the MRR End Date reflects the latest date we want to track revenue related to the renewal opportunity product. In other words, we are creating MRR Schedules for the existing subscription period and the upcoming renewal period.

As such, there are now 24 MRR Schedule records linking to the Subscription i.e. January 1, 2024 through December 31, 2025.

Similarly, if the renewal for 2025 is won, a new renewal opportunity for January 1, 2026, through December 31, 2026, will be created. In this case, the MRR Start Date remains January 1, 2024, and the MRR Start Date becomes December 31, 2026.

MRR Schedules on Evergreen products

So far, we’ve seen that on renewal products, the Start Date and End Date on the opportunity product linked to the Subscription determine the MRR Start and End Dates.

However, there’s a Start Date on evergreen opportunity products but no End Date. That’s because the contract is open-ended. In other words, customers can continue using the product or service until they cancel or stop paying.

So, how do we forecast the MRR value of evergreen products?

The answer is that the Evergreen Default MRR Months field (GSPMRR__Evergreen_Default_MRR_Months__c) on the Product determines how many MRR Schedule records are created when a user adds a product to an opportunity.

System administrators can choose any value for this field.

For example, let’s say the Evergreen Default MRR Months field is set to 12. This means that when an opportunity product is added to an opportunity, twelve MRR Schedule records are created.

However, at the end of the month, an additional MRR Schedule record is automatically created for the following month. In other words, this product always has a bow wave of twelve MRR Schedule records.

Again, the article MRR Schedule Types and Metrics contains more details and examples of how this process works.

How MRR Schedule records are updated by Cancellations

Let’s discuss what happens to the MRR Schedules when customers cancel their Subscriptions.

Cancellation impact on renewal MRR Schedules

In most businesses, customers cannot cancel renewal Subscriptions mid-term. Instead, the customer decides not to renew. The means the Subscription ends, but the renewal opportunity is lost.

When this happens, the app deletes the MRR Schedules associated with the renewal opportunity. This means only the Schedules associated with the period the customer had legitimate access to the Subscription products are retained.

Cancellation impact on evergreen MRR Schedules

Let’s go back to our evergreen product example.

The Start Date is January 1, 2024, and we have twelve MRR Schedules, which will take us to the end of the year. Now, let’s fast forward to June 2024.

Remember that the app creates a bow wave of MRR Schedules for evergreen products based on the Evergreen Default MRR Months field on the product. This means that on June 1, 2024, we have future MRR Schedules taking us to May 2025.

Let’s say the customer cancels their evergreen Subscription on June 30, 2024. The MRR Start Date remains the same (January 1, 2024). However, the MRR End Date automatically updates to June 30. In addition, the MRR Schedule records beyond this date are deleted. That means in our example, only six MRR Schedule records are now linked to the Subscription starting in January 2024.

Cancellations are fully explained in this article: How Cancellations Work.

You can also read about what happens when a customer cancels and then reactivates their Subscription here: How Reactivations Work.