What Revenue Streams Should Be Included in Our MRR Schedule? | SaaS Metrics School | Revenue Streams.
Welcome back to another edition of SaaS Metrics School! In today's session, we're diving into one of the most critical aspects of SaaS finance: revenue streams and MRR schedules. This isn't just a casual conversation—our metrics and valuations depend on how well we understand and manage these revenue streams. In this video, we'll cover the most common SaaS revenue streams, why they matter, and how to structure your MRR schedules to ensure accuracy in your SaaS metrics and due diligence processes.

First up, let's talk about the types of revenue streams you should be tracking in your MRR schedules. As many SaaS businesses grow, it's easy to accumulate multiple revenue streams. From my experience working with clients, I’ve seen companies with a wide variety of revenue streams. But it all starts with the most essential one: subscription revenue.

1. Subscription Revenue
This is the backbone of any SaaS business. Subscription revenue is pure play and should reflect fixed MRR (Monthly Recurring Revenue) or Annual Recurring Contracts (ARC). It's straightforward—there should be no guesswork here. Make sure your subscription revenue is predictable, recurring, and provides a stable financial foundation.

2. Variable Revenue
Next, we have variable revenue. This type of revenue is usually tied to usage, consumption, or transaction-based pricing models. You might see this as "rate times quantity" or a similar structure. While variable, it's still considered recurring revenue. One student in my SaaS Metrics course recently asked, “Can we include one-time revenue in this stream?” My answer: No—the variable revenue stream should still be based on a recurring model to be included in your MRR.

3. Professional Services
Moving on, we have professional services revenue. This includes setup, training, configuration, and onboarding fees that your customers may pay for. While this might not be recurring, it’s an important part of your overall revenue landscape. This revenue stream is often handled separately from subscription or variable revenue.

4. Managed Services
Managed services are another key revenue stream for many SaaS businesses. This is typically people-powered services delivered on a subscription basis. It’s crucial to differentiate this from your core subscription and variable revenue streams.

5. Hardware
Finally, there’s hardware revenue, which comes into play if your SaaS product is tied to reselling hardware—such as charging stations or point-of-sale (POS) software. If you’re bundling hardware with your software, this is a separate revenue stream that requires its own management and MRR schedule.

The Importance of MRR Schedules

Creating accurate MRR schedules for your revenue streams is essential. These schedules are critical for various reasons, from due diligence processes during fundraising or acquisition talks to retention calculations for your internal metrics. Investors, especially in SaaS, rely heavily on MRR data to understand the stability and growth potential of your business.

When building your MRR schedules, I recommend creating them for each major recurring revenue stream—for example, subscription, variable, or managed services. Additionally, it's often helpful to break down your MRR schedule further by product lines, ICPs (Ideal Customer Profiles), and other demographics. This added level of detail can give you better insights into customer retention, churn, and how each revenue stream contributes to your business's overall health.

Retention and MRR Schedules

Your retention schedules should pull directly from your MRR schedules. Combining MRR data with retention metrics gives you a clearer picture of where your recurring revenue is heading. Is it growing, flat, or declining? The story behind your retention data will be crucial in investor presentations, board meetings, and, of course, your company’s valuation.

Remember, keeping your revenue streams distinct in your MRR schedule isn’t just a best practice for internal tracking—it will come up in due diligence and play a big role in supporting your SaaS valuation.

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