How do you Calculate One-Time-Purchase in MRR?
Some products offer one time purchase but still show MRR in their numbers.
One example is Makerpad. Some months ago, they had just a one time purchase but was showing MRR on IH product page. @bentossell how do you do that?
It's actually a bit misleading... it doesn't specifically say Monthly Recurring Revenue, it just says $X/mo and your last 30 days and then the graph to show the monthly.
I do have some monthly recurring too but not sure its properly shown on my product page.
Thank you for your response. I have also been looking at nomadlist.com/open and wondering how he add up the one-time-purchase to ARR and MRR.
Honestly, I am just confused and I will just live with the confusion
I don't use MRR or ARR on /open.
MRR is monthly recurring revenue, since most of my sites aren't recurring, I don't like to use it since MRR is much less than my monthly revenue (due to one-time-payments).
I've used annual run rate (ARR) before in tweets, which is based on monthly revenue * 12. But I always try to add that's showing ARR is presumptuous, you don't know if one month's revenue will continue for another 12 months.
See https://www.accountingtools.com/articles/what-is-run-rate.html
If most of your revenue is recurring, use MRR. If it's not, use monthly revenue, e.g. the money coming in.
In e-commerce, if someone buys (one-time) a product for $X this month and another product for $Y next month, then the LifeTime-Value (LTV) of that customer is $X+$Y. By extension even if someone makes one-time purchases on your site, but they make them regularly (at least one within a 30-day period) you can approximate a MRR from that customer - even though technically you are not sure how much and when they will pay next.
Another example is an annual contract. Technically the subscribers pays one lump sum of cash per year, yet you can recognize revenue on a monthly basis to normalize MRR between your monthly plans and annual plans.
At the end of the day MRR is "what makes sense and is generally agreed on by accounting standards (GAAP, IFRS, etc.)" - or simply put "Cash is a fact. MRR is an opinion." :)
One-Time_Purchase for e-commerce and digital downloads makes sense because there is no maintenance from your end once the transaction is concluded.
In this case, I am talking about SaaS such as Nomadlist and Makerpad. Nomadlist shows MRR here nomadlist.com/open even though he has a one-time purchase.
I am not sure how he is doing the calculation
I don't see MRR anywhere, I show monthly revenue. Please correct me if I'm wrong.
One time purchases are by definition not recurring so they shouldn't be included in MRR.
True. Bentossell confirmed that this https://www.indiehackers.com/product/makerpad is not correct and it is misleading.
Why does it matter? I would spend my limited brain energy in something useful.
ok