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OCV Public Handbook/🛍️Sales/🔄Recurring Revenue

Recurring Revenue

Recurring revenue is the portion of revenue that is expected to be ongoing and renew for a defined temporal period of a year (Annual Recurring Revenue/ ARR) or month (Monthly Recurring Revenue/ MRR).
The form of recurring revenue that is appropriate to reference should be determined on the basis of the billing associated with that revenue. Determination of churn in customers on a monthly basis isn’t possible to determine when software is billed yearly. See:
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Open core pricing
 
The amount of recurring revenue changes from one period to the next such that:
  • Period 2 End ARR =
    • Period 1 End ARR (same as Period 2 Beginning ARR) +
    • ARR Added from New Customers in Period 2 +
    • ARR Grown from Period 1 Customers in Period 2 -
    • ARR Shrunk from Period 1 Customers in Period 2 -
    • ARR Lost from Period 1 Customers in Period 2
  • Net ARR Period 2 =
    • Period 2 End ARR -
    • Period 1 End ARR (same as Period 2 Beginning ARR)
    • =
    • ARR Added from New Customers in Period 2 +
    • ARR Grown from Period 1 Customers in Period 2 -
    • ARR Shrunk from Period 1 Customers in Period 2 -
    • ARR Lost from Period 1 Customers in Period 2
    • The Net ARR is the net change from one period to the next accounting for new ARR, lost ARR, grown ARR, and shrunk ARR.