Lifecycle of a subscription

The relationship with a customer typically includes several stages. For example, they may start by signing up for a free trial, then purchase a subscription, upgrade to a different plan, downgrade that plan, cancel, and eventually re-subscribe.

ChartMogul organizes subscription changes into MRR movements and displays these on the customer's profile page and in the data tables below our charts.

Let’s take a look

Imagine your company offers the following subscription plans:

Plan Monthly Yearly
Silver $30 $300
Gold $50 $500

In addition to the Gold and Silver paid plans, you also offer a free, time-limited trial.

Now, let’s look at one of your subscribers — Emperor Gaming Inc — and see how ChartMogul uses MRR movements to organize and report on changes the company makes to its subscriptions.

New Business

Emperor Gaming subscribes to four Gold yearly plans. You bill them $2,000. ChartMogul classifies the MRR as New Business with a value of $166.67 ($2,000 / 12).

Expansion

A few days later, Emperor Gaming adds two Silver monthly plans. You bill them $60. ChartMogul calculates the MRR as $60 and — because this is an additional subscription for an existing customer — classifies it as Expansion (and not new business).

Handling the many ways in which our various billing system integrations and API handle midterm upgrades is complex. That said, we've worked hard to ensure the following patterns when calculating Expansion MRR. 

Prorated upgrade and instant charge

When you upgrade a customer’s subscription while also prorating the subscription fee for the remaining time in the current billing cycle, ChartMogul registers the Expansion MRR right away.

Upgrade and charge at next billing cycle

When you upgrade a customer’s subscription and wait until the next billing cycle before charging them the higher subscription fee, ChartMogul registers the Expansion MRR at the start of the next billing cycle.

Instant, prorated upgrade with delayed charge

When you upgrade a customer’s subscription but wait until the next billing cycle to charge the customer (in arrears) a prorated subscription fee, bill the prorated subscription fee 

You upgrade a customer’s subscription and wait until the next billing cycle to charge (in arrears) the prorated subscription fee. Once the customer pays (at the start of the next billing cycle), ChartMogul retroactively revises the MRR for the period to include the prorated upgrade.

Contraction

Two weeks later, Emperor Gaming realizes they don't need the Silver plan and cancels their subscription mid-cycle (before the current billing period is over). Since they have another active subscription, ChartMogul classifies the $60 in MRR as Contraction (rather than Churn).

Contraction through cancellation 

When you cancel some (but not all) of your customer’s subscriptions, ChartMogul registers the Contraction MRR either right away or at the end of the service period, depending on your churn recognition setting.

Contraction with prorated downgrade

Things get more complicated with a mid-cycle downgrade if your billing system supports (and you have enabled) prorated downgrades.

In this scenario, you add a prorated credit to the customer’s account in your billing system, which is applied to their next invoice. ChartMogul first learns about the contraction at the start of the next billing cycle, when your billing system creates the invoice. When this happens, we go back in time to the moment of the contraction and revise the MRR for that period downwards.

Churn

As Emperor Gaming approaches the end of the first year of their yearly Gold subscription, they decide to reduce spending by canceling their subscription.

As this was their last active subscription, ChartMogul classifies the cancellation as Churn and reports the churn at the end of the current billing period (since they’ve already paid for the entire year).

Reactivation

Great news, Emperor Gaming re-subscribes! This time, they choose three Gold monthly plans. As a former paying subscriber, ChartMogul classifies the MRR as Reactivation with a value of $150.

Summary

When looking at a customer’s subscription and how it changes over time, keep in mind the following:

  1. ChartMogul organizes subscription changes into five MRR movement types: New Business, Expansion, Contraction, Churn, and Reactivation
  2. The value of the MRR movement is the net change in the subscription’s MRR
  3. MRR movements may not always be obvious: for example, ChartMogul classifies the reduction in MRR resulting from a discount as Contraction
  4. The exact timing of when ChartMogul reports an MRR movement depends on when it receives updated subscription data from your billing system