Apply a fixed-amount discount charge to multiple regular charges
This task outlines the process for applying a fixed-amount discount charge to multiple regular charges, detailing the sequence and conditions for prioritizing charges in the MRR calculation.
In the MRR calculation, if a fixed-amount discount charge can be applied to more than one regular charge, the sequence below is applied to decide which charge to apply first.
- Order by charge types: Recurring regular charges get the discount first; One-time regular charges get the discount next; Usage regular charges are not supported in the MRR calculation.
- If the regular charges have the same charge type, order them by the charge number from the lowest to the highest.
- If a regular charge has more than one charge segments to apply the discounts, order them by start dates: The discount is applied to the earliest charge segment first, then the second earliest, and so on.
See the examples below:
- Apply an account level fixed-amount discount charge to multiple subscriptions
- Apply a subscription level fixed-amount discount charge to multiple regular charges
- MRR calculation aligns its calculation period with the calendar month rather than the Billing Period as in Invoicing. Also, the Billing Cycle Day of a subscription is not taken into account when calculating MRR.
- MRR is applicable to recurring charges only, and TCV is applicable to both one-time and recurring charges. If a subscription includes any usage charge, the metrics calculation will ignore the usage charge and calculate metrics only for the one-time and recurring charges.
- The purpose of MRR is revenue prediction and contract value measuring. Therefore, to enable MRR calculation, when applying fixed-amount discounts to regular charges, the discount must be distributed evenly and applied as a recurring charge. The Invoicing allocates fixed-amount discounts differently because of a different business intention, which is to collect a payment, so it takes an eager allocation model. See the following example:
Suppose you are going to apply a $500 quarterly discount charge to a monthly recurring regular charge. During a Bill Run, $300 will be applied to the first month, $200 to the second month and $0 to the third month. In the MRR calculation, the discount is applied as a monthly recurring discount charge of $166.667/month.
Figure 1.
The following sections describe the calculation of Gross MRR, Discount MRR, and Net MRR in both the charge and subscription levels.