Recurring Revenue and Subscription based models have gained significant popularity among businesses aiming to establish stable revenue streams and foster strong customer relationships. With Odoo, a versatile business management software , enabling and managing recurring revenue plans and subscriptions. In this blog, we will explore the steps to enable recurring revenue in odoo and discuss various types of recurring revenue metrics to track your business’s performance.
What is Recurring Revenue ? or Understanding Recurring Revenue
Recurring revenue is the portion of a company’s revenue that is expected to continue in the future. It involves providing customers with ongoing access to a product or service in exchange for a recurring fee charged at scheduled intervals such as (monthly, quarterly, or yearly). This approach forms the foundation for subscription businesses and membership services, allowing companies to strengthen their relationship with existing customers and foster long term loyalty.
Defining Recurring Revenue in the CRM , You will get an option to define Recurring plan & Recurring Revenues opportunities created.
How to enable Recurring Revenue in Odoo
Recurring Revenue Defining in the settings menu , you will be able to see an option to enable Recurring Revenue option.
CRM >Settings>Configuration
You can manage the Recurring Revenue by clicking on the ‘Manage Recurring plans ‘ to Recurring Revenue option or else you can also find the ‘Recurring plans ‘ field in the configuration menu of the CRM.
Recurring plan Subscription Reports
As we know how our Business going , and where it is going , it is key to success and particularly so when we offer subscription services or products .
A Subscription model is Recurring revenue in which customers pay weekly , monthly or yearly fee in exchange for your product & service.
Types of Recurring Revenue
Monthly Recurring Revenue (MRR)
MRR is arguably the most important metric for subscription business.MRR is Predictable total revenue generated by your business from all the active subscriptions in a particular month. It includes Recurring changes from Discounts , Coupons , & Recurring add-ons, but excludes one-time fees.
Annual Run Rate (ARR)
ARR is the Yearly version of MRR , which is based on the current MRR , to estimate the coming year’s performance .
Non Recurring Revenues (NRR)
NRR shows the revenue earned for everything else than subscription based product or service.
Customer Retention
Customer Retention is a metric that measures customers loyalty , or ability for an organization to keep its customers over time. It is a circular indicator of the success of recurring revenue plans and subscription models.
Churn Rate
The Churn Rate can be defined in this case as the percentage of subscribers who discounted their subscription within a given time period.
There are two types of Churn Rate
- Logo Churn – it corresponds to the subscription cancellation rate.
- Revenue Churn – it corresponds to the monthly Recurring Revenue loss rate.
Customer Lifetime Value (CLV)
Indicates the total revenue expected from a customer during their entire contract period. It helps businesses assess the long-term value and profitability of each customer.