MRR Schedule Types Explained

This article explains the purpose of the MRR Type field on the MRR Schedule object. This is a critical field in calculating monthly recurring revenue and MRR metrics.

MRR Type Field

The MRR Type field (GSPMRR__MRR_Type__c) categorizes every MRR Schedule within the Subscription app in one of the following ways:

• Pipeline.
• No Change.
• New.
• Upgrade.
• Expansion.
• Downgrade.
• Cancellation.
• Churn.
• Reactivation.
• Error.

Here’s what each of these values means.

MRR Type: Pipeline

The MRR Schedule record relates to a pipeline opportunity. This can be an originating opportunity (the opportunity that first results in a Subscription) or a renewal opportunity.

For example, the MRR Schedules for an upcoming renewal opportunity will have an MRR Type of Pipeline.

MRR Type: New

The MRR Schedule is the first schedule on the Subscription where the product is on a won opportunity.

Only one MRR Schedule on any Subscription linked to the Account will have an MRR Type of New. In other words, an MRR Type of New on a Schedule represents the incremental revenue gained from a new customer that month.

The MRR Schedules for other purchases by the same customer will have an MRR Type of Upgrade or Expansion (see below).

MRR Type: No Change

This is the most common MRR Type. That’s because it means there is no difference in the MRR Amount this month compared to the previous month.

For example, a new customer purchases 10 licenses in January. The first MRR Schedule on the Subscription will have an MRR Type of New. The subsequent MRR Schedules have an MRR Type of No Change until the customer takes some other activity (see below).

MRR Type: Upgrade

When the customer increases their spending on an existing product linked to a Subscription, the first MRR Schedule will have an MRR Type of Upgrade.

For example, a new customer purchases 10 licenses in January. The first MRR Schedule will have an MRR type of New. The customer buys an additional 5 licenses in June. In this case, the MRR Schedules for February through May have an MRR Type of No Change. However, the MRR Schedule for June has an MRR Type of Upgrade.

In other words, Upgrade is the uptick in revenue from customers that increase their payment on an existing Subscription. The increase in total payment may be due to a change in the Sales Price and/or Quantity (or a decrease in one and an increase in the other).

MRR Type: Downgrade

Downgrade MRR is the reverse of Upgrade MRR. It happens when the customer decreases their payment on an existing Subscription.

For example, in our previous example, if the customer reduces their licenses by 3 in October, the MRR Schedule for that month will have an MRR Type of Downgrade.

This, of course, assumes a reduction in the MRR Amount. If the customer reduces their licenses but the price increases, you potentially have an MRR Schedule in October with an MRR Type of Upgrade.

MRR Type: Expansion

Expansion revenue occurs when an existing customer purchases a new product.

Upgrade and Downgrade MRR apply to changes in the revenue from a product the customer has already purchased. In contrast, Expansion revenue happens when the customer purchases a new product.

For example, the customer purchases 10 licenses in January. In March, they buy a different product. This new product’s first MRR Schedule on the Subscription will have an MRR Type of Expansion.

MRR Type: Cancellation

Cancellation MRR happens when a customer cancels a Subscription (see also Churn MRR below). In other words, the customer is no longer entitled to use any products or services linked to the Subscription.

MRR Type: Churn

Churn MRR happens when a customer cancels all Subscriptions linked to the Account.

Churn MRR is different to Cancellation MRR. Churn MRR happens when the customer no longer has any Active subscriptions. Cancellation MRR happens when the customer cancels one or more Subscriptions but still holds at least one other Subscription with an Active status.

If the customer cancels multiple Subscriptions on the same day, only the MRR Schedule linked to the final Subscription set to Cancelled will have an MRR Type of Churn. The others will have an MRR Schedule of Cancellation.

MRR Type: Reactivation

Reactivation MRR happens when a customer cancels a Subscription but subsequently restarts it.

For example, the customer purchases 10 licenses on a renewal agreement in January but decides not to renew the following year. However, the customer buys 5 licenses for the same product in March of the following year. Once the deal is won, the first MRR Schedule on the March opportunity will have an MRR Type of Reactivation when the deal is won.