Expansion MRR
Measure upsells, cross-sells and add-ons in a way that ties directly to net dollar retention.
What is it?
Expansion revenue is the additional recurring revenue you earn from customers you already have — when they upgrade a plan, add seats or buy an add-on. It is the cheapest growth in SaaS, because it carries no new acquisition cost, and it is the engine behind any net revenue retention above 100%.
It is also the easiest number to flatter. Expansion looks impressive right up until you net it against the contraction happening quietly on the other side of the ledger.
How to calculate?
For every customer whose recurring payment went up during the period, expansion is the new amount minus the previous amount, summed across all of them. A customer moving from $49 to $99 contributes $50 of expansion, whether the increase came from a plan upgrade, extra seats or an add-on.
Expansion is one of five MRR movements — new, expansion, contraction, churn and reactivation. The figure that ties directly to retention is net expansion: expansion minus contraction, expressed as a percentage of starting cohort MRR. That single number tells you whether your existing customers are, in aggregate, growing or shrinking.