RMR in plain English
RMR is the revenue already on the books when the month starts. If every phone went quiet tomorrow, it is what your active memberships and agreements would still bill.
That makes it a different kind of number from job revenue. Job revenue has to be won again every month. RMR only has to be kept.
Example: an electrical contractor with 300 "Safe Home" members at $12 a month starts every month with $3,600 of RMR, before the first service call.
How do you calculate RMR?
Formula
The core rule is normalize everything to one month. Stripe's billing analytics define MRR the same way: the sum of the monthly-normalized value of active subscriptions, with annual plans divided by 12, excluding taxes.1
Worked example
Example numbers for a plumbing and HVAC shop with three plan types:
| Plan | Active members | Fee | Monthly value each | RMR |
|---|---|---|---|---|
| Comfort, billed monthly | 410 | $19 / month | $19.00 | $7,790 |
| Comfort, billed yearly | 260 | $228 / year | $19.00 | $4,940 |
| Water heater plan, paid once for 2 years | 48 | $192 / 24 months | $8.00 | $384 |
| Total | 718 | $13,114 |
Annualized, that is $157,368 of annual recurring revenue (ARR = RMR × 12).
Common mistakes in the math
Things that inflate or distort RMR
- Counting an annual fee in full in the month it was collected
- Including one-time sign-up or enrollment fees
- Counting members whose card failed and hasn't been recovered for weeks
- Adding repair revenue from members
- Including sales tax
- Counting a plan before it starts or after it expires
Decide how to treat past-due members and write it down. Stripe, for example, keeps past-due subscriptions in MRR and removes them once they are canceled or marked unpaid.1 Whatever rule you pick, apply it every month so the trend is real.
How does RMR change from month to month?
The most useful RMR report is not the total but the bridge that explains the change. Stripe calls this MRR growth: starting MRR plus new and expansion, minus contraction and churn.1
| Line (example month) | Amount |
|---|---|
| Starting RMR | $12,880 |
| + New memberships | +$532 |
| + Upgrades to a higher tier | +$96 |
| − Downgrades | −$38 |
| − Cancellations and lapses | −$356 |
| Ending RMR | $13,114 |
Read the lines, not the total. Here the shop sold $532 of new RMR but lost $356, so two-thirds of its selling effort only replaced losses. That loss line is churn, and lowering it grows RMR as surely as selling more.
RMR vs revenue vs deferred revenue
| RMR | Revenue (P&L) | Deferred revenue | |
|---|---|---|---|
| What it measures | Monthly value of active plans | Income earned in the period | Cash collected for service not yet delivered |
| Annual plan paid upfront | Fee ÷ 12 each month | Recognized as the service is delivered | The undelivered part sits here |
| Who uses it | Owners, managers, buyers | Accountants, tax returns | Accountants, balance sheet |
| Includes member repairs? | No | Yes | No |
If you collect annual fees upfront, the gap between cash and earned revenue is deferred revenue. Your accountant decides how membership revenue is recognized; RMR is a management number, not a replacement for it.
What grows RMR?
| Lever | Why it works | How to check it |
|---|---|---|
| Offer the plan on every eligible visit | More sign-ups from customers you already serve | Membership conversion rate by tech |
| Recover failed cards | Lapses nobody chose; Stripe attributes 25% of lapsed subscriptions to payment failures (vendor data)2 | Lapses with a failed-payment reason |
| Book every included visit | Members who get their visits renew | Visits completed ÷ visits due |
| Tiered plans | Lets members move up instead of out | Upgrade and downgrade lines in the bridge |
| Price changes at renewal, with notice | Raises the monthly value of existing members | Average RMR per member over time |
Lifetime value, the renewal curve and what one point of retention is worth are worked through in membership math: lifetime value and churn.
Which RMR numbers belong on the owner's scorecard?
One total hides too much. Five numbers, reviewed monthly, tell the full story:
| Number | Formula | What it tells you |
|---|---|---|
| Ending RMR | From the bridge above | Size of the recurring base |
| Net new RMR | New + upgrades − downgrades − losses | Whether the program grew this month |
| RMR churn rate | (Downgrades + losses) ÷ starting RMR × 100 | Share of recurring revenue leaking out |
| RMR per member | Ending RMR ÷ active members | Whether pricing and tiers are moving up |
| Share on autopay | Members with a card on file ÷ active members | How exposed you are to manual-payment lapses |
With the example month above, RMR churn is ($38 + $356) ÷ $12,880 = 3.1%, and RMR per member is $13,114 ÷ 718 = $18.26. Neither needs a benchmark to be useful: watch the direction month over month.
RMR in TradesWork
The TradesWork memberships page shows active members and recurring revenue alongside visits due and auto-renewals, and plans can be priced monthly, yearly or paid once for 1 to 60 months. Reports keep each metric's definition and date basis next to the number and show a dash rather than a zero when there is no data. See memberships.
Footnotes
-
Stripe Docs, Billing analytics: metric definitions, MRR and MRR growth. ↩ ↩2 ↩3
-
Stripe, How we built it: Smart Retries, January 23, 2024. Vendor data. ↩
