As you start using ProfitWell metrics, you'll notice that there are some key differences in your subscription metrics reporting between ProfitWell and Paddle. Accuracy and actionability are the top priorities for metrics- as ProfitWell and Paddle come together, we want to be transparent in the ways your data reporting will vary. When reading your ProfitWell data, there are questions that might come to mind.
What is the difference between churn and cancellation?
When a customer cancels their subscription, we recognize the MRR of a customer until the end of their billing cycle.
We define a cancellation as a customer who is still on an active subscription and has paid till the end of their billing cycle. We consider a customer churned once they are no longer on an active subscription and are not paying for a product.
Are past due users considered churned?
No, we consider past due users to be active customers who are in their dunning window and need to be recovered. Since this user did not opt to cancel, we recommend having a dunning window of at least 15 days to recover this user. However, if the customer goes past their dunning window without paying for their late invoice, we will mark this user as delinquently churned. You can learn more about delinquent churn here.
Do you support metered billing?
ProfitWell metrics does not support metered billing at this moment, however there are plans to support this in the future.
Do you support per-seat billing?
Yes, we do! If additional seats or 'quantities' are added to a subscription, we will reflect this as an upgrade on that plan.
Do you include VAT in metrics?
No, all the MRR presented within ProfitWell is exclusive of taxes.
How can I view my net revenue?
Metrics displays all your data in terms of gross revenue.
Where is my one-time revenue data?
ProfitWell focuses on giving you insights regarding your subscription data. At this moment, we ignore any one-time customer transactions.
Why does my churn number look lower than expected?
There are two main reasons your churn number might appear lower than you expect:
1. ProfitWell excludes users who sign up and churn within the same month from MRR and churn numbers. This is to prevent artificially boosting your MRR and churn numbers and give you a more accurate breakdown of your gross recurring revenue.
What is the difference between the customer pausing a subscription and us pausing the subscription as the last step to dunning?
The way we reflect the paused subscription depends on who paused it. If the customer paused the subscription, they are displayed as voluntarily churned on the renewal date. Once the user's subscription is active again, they will be displayed as reactivated within ProfitWell.
However, if the customers subscription is paused as a final step to the dunning process, then ProfitWell will show this user as delinquently churned.
Why are some of my customers' metrics not being displayed within ProfitWell?
We focus on giving you insights regarding your subscription data for customers on active subscription plans. This means that if you have any one time-payment customers or trialing (including paid trialing) users, their revenue data will not be included within metrics.
How are discounts and coupons calculated?
We always subtract discounts and coupons before calculating MRR, regardless of frequency. However, if a user has a 100% discount, they will be considered a trialing user since they are not contributing to your revenue.
How are refunds calculated?
Generally speaking, we ignore refunds. The only exception here is if the refund is for an annual plan and you choose to churn the subscription immediately in Paddle. This means that the customer is not paying for the service any longer and they are no longer an active customer.
With the purpose of MRR being a momentum metric, we're focused on events that are recurring. If you offer a customer a one-month full refund, we don't believe that should be classified as churn, and reactivation the next month—or, in the case of a partial refund: a downgrade, and upgrade the next month. It doesn't seem actionable to include these scenarios into your metrics.
You can always see refunds in your Cash Flow tab (updates once a week for Metrics basic users, and real-time for Metrics Plus users.
How is LTV calculated?
Our calculation is roughly ARPU/(1-Retention), but we also apply a smart smoothing algorithm on top of this.
In other words, we take a look at more than the current month ARPU and churn rate: we take a look at the whole ARPU (typically stable) and churn (usually volatile) trends, apply some magic (math, really!), and go from there.
We also think that upgrades, reactivations, and downgrades should also meaningfully impact your LTV, so instead of simply taking churn, we take 1-Retention as the denominator.
Accuracy is, has been, and will always be our top priority. If you have any questions, please reach out to us with an example of a customer that is either missing or reflecting inaccurate subscription activity within ProfitWell. We're happy to help get to the bottom of any discrepancies!