In business, every income received will be very meaningful and needs to be recorded. However, there are two types of revenue that can be obtained in one business model, namely recurring revenue and non-recurring revenue. Even though the differences are very clear, these two types of income are sometimes confused.
These two types of income have been implemented by many businesses today. Call it streaming services, software system services (SaaS), to culinary businesses. They seem to give customers the option to ultimately still get the same amount of income.
Your business cash flow will be better if you succeed in taking advantage of these two types of income. However, it's even better if you know the difference. Check out the meaning and differences between recurring revenue and non-recurring revenue below.
Recurring revenue is obtained from a monthly subscription package. When a customer signs a subscription contract, they agree to make payments every month. This payment will become regular income every month for your business.
The services provided on monthly subscription packages can also vary. Content streaming service companies will provide their customers with a number of content that can be accessed in full in one month. Likewise with other service businesses. Customers may get equipment units, service services, and also several packages every month.
In general, you will get income depending on the total customers you get. You might say a business is growing when it gets a large number of total customers. However, this is not yet a benchmark for regular income.
In the monthly recurring revenue (MRR) system, an annual calculation or annual recurring revenue (ARR) is still required. This calculation will be greatly influenced by changes in your own customers. In other words, you must continue to increase your total customers every month (New MRR)
Even so, there will be typical customers who will only be satisfied with existing services. There are also those who want to add services and ultimately upgrade the package. However, prepare yourself when a customer leaves (Churned MRR) because they don't like the service provided.
These additions, upgrades and churned will be used as the basis for calculating MRR. Therefore, it is recommended that you continue to add and upgrade customers while keeping customers to stay in order to maintain a fairly large regular income.
In contrast to recurring revenue, non-recurring revenue is revenue from customers that is only obtained once for a specific product. This means that customers do not need to make payments for this product at a later date so you no longer earn income.
At first glance, this income will be greater than the monthly value your business will receive for one customer. Usually non-curring revenue is obtained from something that is initial in nature.
For example, you apply a subscription fee or membership fee to customers. This fee is only paid once at the start of registration. After that, customers do not need to pay again at any time.
However, this income also requires returns for customers. That means your business has to provide something for the costs incurred. For example, installation services or merchandise.
In the calculation, non-recurring revenue is really only calculated from total customers. This means that the calculation is not influenced by customers who upgrade or those who decide not to resubscribe.
That's the difference between recurring revenue and non-recurring revenue. To perform comprehensive calculations, equip yourself with the Finance for Non-Finance Professional Program. That way, you can be more skilled at calculating monthly and annual income.
In business, every income received will be very meaningful and needs to be recorded. However, there are two types of revenue that can be obtained in one business model, namely recurring revenue and non-recurring revenue. Even though the differences are very clear, these two types of income are sometimes confused.
These two types of income have been implemented by many businesses today. Call it streaming services, software system services (SaaS), to culinary businesses. They seem to give customers the option to ultimately still get the same amount of income.
Your business cash flow will be better if you succeed in taking advantage of these two types of income. However, it's even better if you know the difference. Check out the meaning and differences between recurring revenue and non-recurring revenue below.
Recurring revenue is obtained from a monthly subscription package. When a customer signs a subscription contract, they agree to make payments every month. This payment will become regular income every month for your business.
The services provided on monthly subscription packages can also vary. Content streaming service companies will provide their customers with a number of content that can be accessed in full in one month. Likewise with other service businesses. Customers may get equipment units, service services, and also several packages every month.
In general, you will get income depending on the total customers you get. You might say a business is growing when it gets a large number of total customers. However, this is not yet a benchmark for regular income.
In the monthly recurring revenue (MRR) system, an annual calculation or annual recurring revenue (ARR) is still required. This calculation will be greatly influenced by changes in your own customers. In other words, you must continue to increase your total customers every month (New MRR)
Even so, there will be typical customers who will only be satisfied with existing services. There are also those who want to add services and ultimately upgrade the package. However, prepare yourself when a customer leaves (Churned MRR) because they don't like the service provided.
These additions, upgrades and churned will be used as the basis for calculating MRR. Therefore, it is recommended that you continue to add and upgrade customers while keeping customers to stay in order to maintain a fairly large regular income.
In contrast to recurring revenue, non-recurring revenue is revenue from customers that is only obtained once for a specific product. This means that customers do not need to make payments for this product at a later date so you no longer earn income.
At first glance, this income will be greater than the monthly value your business will receive for one customer. Usually non-curring revenue is obtained from something that is initial in nature.
For example, you apply a subscription fee or membership fee to customers. This fee is only paid once at the start of registration. After that, customers do not need to pay again at any time.
However, this income also requires returns for customers. That means your business has to provide something for the costs incurred. For example, installation services or merchandise.
In the calculation, non-recurring revenue is really only calculated from total customers. This means that the calculation is not influenced by customers who upgrade or those who decide not to resubscribe.
That's the difference between recurring revenue and non-recurring revenue. To perform comprehensive calculations, equip yourself with the Finance for Non-Finance Professional Program. That way, you can be more skilled at calculating monthly and annual income.
