Prior Year: New Revenue = 248,631. Renewal Revenue = 369519. Conversion rate = 41.7%. What is the Renewal RAte? (Def: Conversion rate = new rev converts to renewal rev in the following yr. Renewal rate = renewal rev that converts to renewal revenue in the following yr. Renewal Revenue is comprised of partly the prior years new sales and prior years renewal sales
To calculate the Renewal Rate, we need to determine the proportion of Renewal Revenue compared to the prior year's Renewal Revenue and New Revenue.
Conversion Rate, as defined, is the percentage of New Revenue that converts to Renewal Revenue in the following year. In this case, the Conversion Rate is given as 41.7%.
To find the Renewal Rate, we can use the following formula:
Renewal Rate = (Renewal Revenue / (New Revenue + Renewal Revenue)) * 100
Let's substitute the given values into the formula:
Renewal Rate = (369,519 / (248,631 + 369,519)) * 100
Simplifying the equation further:
Renewal Rate = (369,519 / 618,150) * 100
Renewal Rate ≈ 59.79%
Therefore, the Renewal Rate in this case is approximately 59.79%.