What is the difference between “committed” and “contracted” MRR?
Committed Monthly Recurring Revenue is the value of recurring portion of subscription revenue. For term-based subscription businesses, this is the portion of subscription revenue that is recognized each month. It excludes revenues that are not recurring even if such revenues are on a revenue recognition schedule. However, like all other SaaS metrics and terms, there are no rules. Variable fees might be included even if not contractually obligated if a case can be made that there is a history of consistent performance (i.e. “commitment”)
For term-based subscription businesses, Committed Monthly Recurring Revenue is the value of the Contracted MRR from the booking date through the subscription end date. It excludes revenues that are not recurring even if such revenues are on a revenue recognition schedule. Variable fees are not typically included.
For month-to-month businesses (no term agreement), Committed Monthly Recurring Revenue is the baseline value of the service. Again, there are no rules, so if your business has no minimum monthly fee or other commitment, then use actual history as the arbiter of the definition, and include in your Committed Monthly Recurring Revenue that which empirical data can easily support.
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