Monthly Recurring Costs (MRC) Annual Review – Save $$$ In Minutes

Monthly-Recrurring-Costs-Dam-Leak-2-1200x600
Please Follow and Like Us!
onpost_follow

Monthly Recurring Costs (MRC) Annual Review
Save $$$ In Minutes

❏ Last week I spoke to 10 Early Stage Startup Funding Methods (Link). In this post, I will speak to the importance an often overlooked financial review that is missed by companies large and small. It is the Monthly Recurring Costs (MRC) Annual Review. In under an hour each year, you could save yourself thousands or even tens of thousands of dollars! Check if your Financial Calendar has MRC Review. If not, you could have a big leak in your financials! I’m going to explain why you could be losing hundreds, if not tens of thousands, of dollars every year. Then you’re going to learn how easily you can plug that big financial leak! At IdeaToGrowth.com (Link), we are here to help.

As the Founder and CEO of IdeaToGrowth.com (Link), my goal is to be there with the right kind of help at the right time for Executives. I write about many common business challenges businesses of all sizes will face. Executives who follow me and read my posts will find many answers to problems they are facing today. If you like my articles and need hands-on help, reach out to me.

Ready to learn something new? Let’s get started!

Monthly Recurring Costs (MRC)

Most of have many Monthly Recurring Costs (MRC) in our businesses and personal life. For example, nearly all software that we use is Subscription based. In the past, this was not always true. In the past, you could buy a copy of Microsoft Windows or Office and use it forever. This business model proved not to be sustainable. When a newer version launched, many customers would not upgrade if they deemed a product to be “good enough.” This sometimes led to a business dying for lack of revenue. The solution was the Software as a Service (SaaS) business model. The SaaS business model is now standard for virtually every software company.

If you want more articles like this, please “Like” or “Heart” me.” Thank you!

Fire and Forget Lockup Strategy

Most subscriptions get quoted as a Monthly Use Fee. Sometimes the subscriptions can be paid annually for a discount. Typically the annual quote is “Get 12 Months for the Price of 10 Months”. This pricing method locks in a customer for 12 months by offering a discount. Often this discount is tied to a personal or corporate credit card. A component of the discount includes contractual wording that “auto-renews” the service at the “then current price” until service is canceled in advance. Its a “fire and forget” method of getting a customer using your software. Once they sign up for a year, when renewal time comes around, it just happens without the customer having to think about it. Great for the SaaS company. Not necessarily so great for the SaaS customer – you!

MRC – Expense or Capital Items

Over time, a company’s MRC can become a significant part of its budget. SaaS is often treated as an Expense and not a Capital Item on a budget. Typically Capital Items get a much closer look at the Annual Budgeting Process than Expense Items. This is too deep of a subject to cover in this post but felt it important to mention herein. You should review with your CPA if your MRC items are being correctly categorized as an Expense Item or should be treated as a Capital Item.

MRC Review Strategy

I am a strong believer in adding every MRC item to your Financial Calendar. Most business financial events calendars only include a few things. IRS and state taxes, quarterly and annual budget reviews, and financial press release dates are the most common. Add the MRC Review date to it. If you haven’t done this before, start today. Later, schedule it as part of your annual budget creation process.

Start today by creating a list of all of your monthly recurring charges. Your bookkeeper should be able to pull most of this from credit card statement if you’re paying monthly. For those MRC services you’re paying annually in order to get a discount, your bookkeeper may need some guidance from various department heads.

Now put each item on the Calendar and mark it as a Monthly Recurring Cost or an Annual Recurring Cost. Include in the calendar event what you paid initially and what you pay now that the discount period has ended. If the difference in annual dollars is a hundred dollars or more, you may want to investigate. How does one best look at a better price? Check online for any current discounts. Call the provider and tell them the rate is too high and you need a better price, or you’ll have to investigate taking your business elsewhere. If you are non-profit, do they have a non-profit discount that you are not using? Is a there a competing service that you can switch to quickly without significant retraining or disruption?

Conclusion

I hope I have educated you on Monthly Recurring Costs (MRC) Annual Review – Why You Need One. Nearly every company that I coach was not doing this practice before my suggestion. Every one of them that took some time to look at their MRC found hundreds to thousands of dollars in annual savings!

    If you liked this article and would like more, please give me a “Like,” “Heart” or “Thumbs Up.” Thank you!

FREE Business Coaching Newsletter & Discounts!

If you’ve liked this blog post, you’ll love my FREE Business Coaching Newsletter (Link)! My Newsletter covers everyday business problems that I’ve helped clients with that you’re likely to experience. Topics include hiring, firing, managing employees, review processes, finding the right accountant and lawyer, and so much more. I predict you’ll use it as your go-to-guide when issues arise.

If you subscribe to my FREE Business Coaching Newsletter (Link), I’ll also offer you a discount coupon for my book Angel Investors to Venture Capital: 10 Slides to Funding Success. In the book, I do a more detailed dive into each of the ten slides. You’ll see both good and poor examples of each of the ten topic slides. I’ll also discuss good and poor examples of presentation techniques. You’ll learn how to identify “Lookie-Lou” investors from “serious investors” who will write you a check. I’ll teach techniques for how to overcome nervousness, stuttering and “brain-freeze” during your presentation. You’ll learn appropriate attire and why showing up even a minute late can doom a presentation.

As a bonus, I’ll give you templates to make your own Investor Pitch Deck (Link). You’ll get a template for Excel (*.xlsx) and for Apple Keynote (*.key) presentation software. The complete package includes the book and both templates for the special price “X” (you’ll find out soon!).

Subscribe to My FREE Business Coaching Newsletter: Idea To Growth Business Coaching Newsletter (Link)

Learn More About Me: https://linkedin.com/in/kennethervinyoung (Link)

Recent & Coming Posts

In My Next post: 10 Steps to Avoid Going Out of Business (Link)

Read My Previous Post: 10 Early Stage Startup Funding Methods (Link)

If you want more articles like this, please “Like” or “Heart” me.” Thank you!

Please Follow and Like Us!
onpost_follow

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.