How is your Braintree MRR calculated?


Your MRR for any given time period is calculated from one master formula which looks like this:

(Previous Month Net MRR) + ((New MRR + Expansion MRR) - Churn MRR)

Ok, so let's jump into each part of that master formula.

Previous Month Net MRR

This is the simplest one. It's simply last month's net MRR, which is itself made up of the same formula as above, except it’s for the previous month.

New MRR

Your New MRR is the total cash worth of subscriptions which have a first billing date for any given month and that remained active for that given month.

We calculate subscription activation not on it’s creation date, but on it’s first billing date.

Lets start with some scenarios to give you an example:

New monthly subscriptions

Say you have a new monthly subscription for the current month being analysed. "New" meaning, the first billing date is within this month.

new $10 subscription

In this case your New MRR will be $10.

New Yearly subscriptions

It gets slightly more complex now. Yearly subscriptions have the exact same rule except the final value is divided by 12, since this is new recurring value.

new $99 yearly subscription

In this case your New MRR will be $8.25 (99/12).

”Remained active for that given month”

Let's look at the last part of our rule: ”Remained active for that given month”.

Say, for a given month, that a new subscription has it’s first billing date but is then cancelled, all within the same month.

new $10 subscription, 2 days laters subscription is cancelled.

In this case we say that your New MRR is 0, because by the end of the month there was no real New MRR. It would only be considered New MRR and then Churn MRR if the cancellation happened in the next month.

New MRR from existing customer

New MRR is not always from new users. You may have users in your system who had a subscription and then perhaps cancelled it and we're counted as Churn. If later, even in the next month, they subscribe again with a new subscription (again, by first billing date), then we count them as New MRR as usual.

Expansion MRR

Expansion MRR is the total cash value difference of subscriptions which were upgraded for any given month.

The any given month is important here. For a subscription to be an upgrade it needs to have been upgraded on that month. Again, let’s work through a few scenarios:

Subscription is upgraded

Say a subscription is upgraded on the same day.

Monthly subscription value changes from $12.00 to $29.99

In this case the Expansion MRR is the upgrade difference, it’s $17.99 (29.99-12.00).

Existing customer subscribes to higher value subscription in a different month

This is where any given month is important. Say a customer cancels their subscription on one month, and then next month subscribes to a new higher worth subscription. Subscribes here means, the time of the first billing date.

month 1: new $10 subscription
month 3: cancels $10 subscription
month 4: new $19 subscription

This would not be counted as expansion. This would actually be counted as New MRR, and month 3 (the month of the cancellation) would be counted as Churn.

It’s only an upgrade if the cancellation and first billing date of the new subscription happens in the same month (BTMetrics also handles subscription updates as expansion too, not just cancelations/new).

Churn MRR

Churn MRR is actually made up of two independent calculations, downgrades and cancelations.

Churn MRR = (downgrades sum) + (cancelations sum)

Downgrades work in exactly the same way as upgrades, except the difference is negative. That is, we look for subscriptions which have reduced in value as opposed to increased in value, as we do with upgrades.

So let’s focus on cancelations.

Cancelations are similar to New MRR in that it is the total cash worth of subscriptions canceled for any given month that remained canceled for that given month.

Lets start with some scenarios to give you an example:

Canceled monthly subscriptions

Say you a monthly subscription was canceled in current month being analysed.

canceled $10 subscription

In this case your cancelation churn will be $10.

Canceled yearly subscriptions

Yearly subscriptions have the exact same rule, except the final value is divided by 12, since this is the canceled recurring value.

canceled $99 yearly subscription

In this case your cancelation churn will be $8.25 (99/12).

”Remained canceled for that given month”

Let's look at the last part of our rule: ”Remained canceled for that given month”. This is very similar to our New MRR rule.

Say, for a given month, that a subscription is canceled but a new subscription is then created (created is defined by the first billing date) again at the same value it was at before, all within the same month.

cancel existing $10 subscription, 2 days laters new subscription is created again at $10.

In this case we say that your Churn MRR is 0, because by the end of the month there was no real change. It would only be considered a cancelation if the cancelation remained until the end of that month.