There's no shortage of jargon for makers to throw around...
Unpopular opinion: I'm slowly getting pestered by seeing these 4 terms being used out of context 👇
1️⃣ MRR & ARR
Monthly RECURRING revenue. It's exactly what the title claims.
Makers need to remember that there's a difference between MRR and just monthly revenue.
Let's say you made $1k in your first month. Great!
You've now made $1k in monthly revenue, but at this point, there's no recurring element to this amount.
Now, when you consistently start making $1k across every month, you can confidently announce that you have a recurring monthly revenue stream ✅
The same concept applies to ARR.
If you've been in business for 3 months, you've generated $X in TOTAL REVENUE, not annual recurring revenue.
2️⃣ Revenue vs profit
Another topic I want to highlight is the difference between revenue and profit.
Last month, I turned over $4.5k in revenue, with $3k of that being profit.
As far as I'm concerned, there's $1.5k that doesn't exist.
In a community/industry where we're trying to create long-term businesses, why is the main measurement of success just revenue?
If you're optimising for a financial goal, monthly profit (MP/MRP) should be the lead measurement.
3️⃣ User vs customers
Getting XXXX amount of users is different from acquiring X amount of customers.
In my opinion, users are those who consume your product for free.
Customers, on the other hand, pay to use your product or service.
Unless you're building an ad-supported product like Facebook, you'll need to source paying customers if you plan to stay in business.
4️⃣ Followers aren't always an audience
You may have 10k Twitter followers, but that doesn't mean you have an audience of 10,000...
Of those 10k people, let's say 4% actually engage with your content.
Of this 4%, how many of these people would you actually consider to be your target customers?
In summary 👇
Is there anything else you'd add to the list?
These are just a few opinions I hold based on my personal experiences. I'm sure there's plenty of founders out there who could also justify valid opposing views.
If you're interested in following more of my content, I frequently share transparent insights about my journey here.