Revenue Recognition

If enabled, monthly revenue recognition reporting is available for download from within the log. In the upper righthand corner, you can download the Revenue Recognition Summary and reports. The Revenue Recognition report groups all Payment source type is the type of credit card used in the transaction.

Transactions in a given month by Cash In, Earned Revenue, Deferred Revenue, Adjustments and Cash Out for the period. Each period for the Revenue Recognition Reports balance like this:

(Previous Deferred Revenue + Cash In) = (Cash Out + Earned Revenue + Current Deferred Revenue + Adjustments)

Daily Earned Revenue Calculation

Earned and deferred revenue is calculated daily. For example, if a subscriber pays $50.00 on 1/3/2014 for an annual subscription from 2/1/2014 to 2/1/2015, the earned daily revenue is calculated as $0.13 per day ($50 / 365 days = $0.136986301) starting on 2/1/2015.

Rounding and Remainders

Daily recognized revenue is always rounded down. For example, $0.136986301 is rounded down to $0.13. In most cases, rounding down will create a remainder amount. Piano will recognize a penny per day starting from the last day of the period working backwards to account for this.

In the case of a $50 annual subscription, this remainder would be $2.55 ($0.13 * 365 + $2.55 = $50). The $2.55 remainder is applied over the last 255 days of the 365-day period. For the first 110 days of the 365-day period, $0.13 daily revenue would be recognized. For the last 255 days, $0.14 would be earned per day.

Weekly, Monthly, and Annual Terms

Piano can bill in two ways using fixed day increments or calendar date schedules.

Fixed-day based billing

For monthly and annual subscription terms, Piano can bill and extend a subscriber’s access a fixed number of days and not bill on a fixed day of the calendar month. For example, using the fixed-day access, the setting for a monthly subscription Piano would bill every 30 days. For a fixed-day annual subscription, Piano will bill every 365 days, even in the case of a leap year.

If a customer signs up for a $5.00 fixed-day monthly subscription on February 1st, 2014, Piano will bill the customer $5.00 on February 1st, 2014 and then again 30 days later on March 2nd, 2014.

Calendar based billing

For monthly and annual subscription terms, Piano can also bill and extend a subscriber’s access on a fixed day of each calendar month or year. For a monthly subscription, Piano can bill on the same date every month. For annual subscriptions, Piano will bill on the same date the following year, even in the case of a leap year.

For example, if a customer signs up for a $5.00 monthly subscription on February 1st, 2014, Piano will bill the customer $5.00 on February 1st, 2014 and then again on March 1st, 2014.

If the billing date does not exist in the next month, Piano will bill on the last day of the next month. For example, if a customer signs up for a $5.00 monthly subscription on January 31st, 2014, Piano will bill the customer $5.00 on January 31st, 2014 and then again on February 28th, 2014. This user would be billed on the 28th of every subsequent month.

Standard refunds

Piano reflects refunds in the month in which the refund is made. The Adjustments row shows changes to recognized revenue resulting from refunds made within a given month. The Cash Out row captures the change in net revenue due to refunds issued during a given month.

Custom refunds

Piano enables publishers to issue custom refund amounts for a portion of a user’s subscription purchase.

If the refund amount is in excess of the already recognized revenue, the difference will be included in the Adjustments row.

For example, if a user purchases an annual subscription for $120 on January 1 and requests a refund on August 1, we would have already recognized 7 months of revenue, or $70. If this user is then refunded for half a year, $60, the difference in the recognized revenue and the amount that should have been recognized given the refund is $10. In this case, $10 would appear in the Adjustments column and $60 would appear in the Cash Out column.

If the custom refund amount is less than the already recognized revenue, the additional revenue will be recognized over the remainder of the access period, or at the time of the refund if access is revoked immediately.

For example, if a user purchases an annual subscription for $120 on January 1, requests a refund on April 1 and the publisher wants to refund the user for half a year, he can do so in two ways:

  • The publisher revokes access on April 1st and the remaining three months of revenue (April, May and June) will be recognized immediately, and Cash Out of $60 will be reflected in April.
  • The publisher waits to revoke access until a half a year period expires, June 30, and the remaining three months of revenue will be recognized as usual in April, May and June ($10 each month). Cash out of $60 will be reflected in April.

Prorated Billing

Because Piano bills every 7 days on a weekly subscription, every 30 days on a monthly subscription, and every 365 days on an annual subscription, Piano does not prorate to adjust subscriptions to a fixed calendar month.

Download Latest Revenue Recognition Summary

The Revenue Recognition Summary report groups all summaries in a given month by Cash In, Earned Revenue, Deferred Revenue, Adjustments, and Cash Out for the period.

Cash In

This is the total revenue collected each month from successfully charged. This only includes cash in that has been successfully settled by the payment provider within the month.

Cash Out

This is the total refunds granted by the publisher to end customers within the period of the report. At present, the report is organized by month, then by currency + term. As the report grows, new months are added to the same report.

Earned Revenue

Earned Revenue is the total amount of Previous Deferred Revenue Cash In that can be recognized in a given period. For example, if a user purchases a monthly pass in the middle of the month, only the first 15 days of the subscription can be recognized in the current month. The remainder becomes Deferred Revenue.

Deferred Revenue

Deferred Revenue is the remainder of any Previous Deferred Revenue + Cash In that cannot be recognized in the given month.

Adjustments

This is the total amount of adjustments needed for a that was refunded, but had some revenue previously recognized. For example, if a customer purchases a monthly subscription on 6/21/2015 for $30.00, $21.00 of the $30.00 will be recognized in the month of June. If the publisher decides on 7/5/2015 to refund the full purchase price of $30.00, an adjustment of -$21.00 will need to be made to account for the $21.00 originally recognized in the month of June.

Download Latest Revenue Recognition List

The Revenue Recognition List contains all the information that was used to calculate and prepare the Revenue Recognition Summary. There are different fields available in this report than in the Download as CSV Report.

External Tx ID

Each transaction recorded in Braintree has a unique ID. The External Tx ID represents the ID of the transaction from that outside system. Each Piano Transaction should have a corresponding, unique, External Tx ID.

User

This is the email address of the customer who made the purchase.

Term

This is the plain language name of the term. It is equivalent to the 'Term Name' in the current 'Transaction Log' download report. Term IDs are not included in this download.

Amount

This is the amount the customer paid. It's similar to the Price field in the 'Log' download report, but doesn't include the currency. This means the end user can quickly add up the values using any spreadsheet program.

Currency

This is the unit that the amount was paid in. Keeping this separate allows for advanced sorting.

Payment date

This is the date that the transaction occurred, presented in dd/MM/YYYY format. It's equivalent to the Date field in the 'Transaction Log' download report, but doesn't include the timestamp information.

Access From

This is the date that content access began for the transaction in question, presented in dd/MM/YYYY format.

Access To

This is the date that content access ends for the transaction in question, presented in dd/MM/YYYY format. It's equivalent to the Expires field in the 'Transaction Log' download report, but doesn't include the timestamp information.

Refund Date

If a transaction is refunded, the date of the refund is included in this column, in dd/MM/YYYY format.

Adjustment

If a transaction is refunded, but revenue against this transaction was previously recognized, an Adjustment to this transaction will be made. For example, if a subscription of $120.00 was purchased in February, and $10.00 was recognized in March, and then the full $120.00 was refunded in April, an adjustment of -$10.00 will be made to balance the Earnings.

State

This is the status of the transaction, which is either Completed or Refunded. It is equivalent to the Status field in the 'Transaction Log' download report.

Total Recognized

This is the total amount of the transaction that is available for recognition. Generally, this amount should equal the Amount, unless (for example) sales taxes or other fees were collected in addition to the original Transaction.

Days of Access

This is the total amount of access time that was purchased with the transaction. Total Recognized/Days of Access represents the daily amount of revenue that can be recognized for each transaction.

M/D/YYYY (4/1/2015)

This is the total amount of revenue recognized for each transaction within a given month. At present, the field displays in m/d/YYYY format (e.g., 4/1/2015). This means that the field is unfriendly for fast summation in most spreadsheet software.