How to calculate Normalized Subscription Revenue

 

Description:

Subscription revenue that is split to the months when the service is delivered. The splitting is called ‘normalization’.


Use:

Used to calculate Monthly Recurring Revenue (MRR).

Why is it needed:

You may have received subscription revenue in advance.
Normalization prevents these problems:

  • You may think that your SaaS has started to grow faster, when there are more prepayments
  • You may think that your SaaS is doing worse when no revenue gets collected in that month

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