Expansion to Contraction MRR Ratio
Upsell dollars against downgrade dollars — whether your existing base is trading up or down.
What is it?
Expansion-to-Contraction MRR Ratio compares the revenue your existing customers add through upgrades against the revenue they shed through downgrades — expansion MRR divided by contraction MRR. It is the clearest read on whether your installed base is trading up or trading down.
Above 1× your base is net-expanding in dollars; below 1× it is contracting even before churn enters the picture. Because both sides come from existing customers, it isolates the up-tier motion from new-business noise.
How to calculate?
Divide expansion MRR by contraction MRR for the period. Three thousand in expansion against eight hundred in contraction is a 3.75× ratio. Keep upgrades and downgrades symmetrically defined — if a plan swap counts as expansion on one side, its reverse must count as contraction on the other.
Pair it with the count ratio: dollars tell you the magnitude, counts tell you how broad the behaviour is, and a gap between them points to a few large moves rather than a base-wide trend.