Definition
Account expansion rate measures how many existing accounts expand (upgrade, add seats) over a period.
Formula
Expansion rate = expanding accounts / total active accounts
Example
If 40 of 200 accounts expand, the rate is 20%.
How to use it
- Segment by plan or cohort to find expansion levers.
- Pair with expansion revenue to measure depth and breadth.
Common mistakes
- Counting renewals without any increase as expansion.
- Blending expansion with new logos in reporting.
Why this matters
This term matters because small changes compound in SaaS metrics. Use consistent definitions by cohort and segment so you can diagnose retention, payback, and growth quality.
Practical checklist
- Write a 1-line definition for "Account Expansion Rate" that your team will use consistently.
- Keep the time window consistent (weekly/monthly/quarterly) when comparing trends.
- Segment results (channel/plan/cohort) before drawing big conclusions from blended averages.
- Sanity-check with a related calculator from the same category on MetricKit.
- Read the related guide (e.g., Retention & churn hub: cohorts, GRR/NRR, and retention curves) for context and common pitfalls.
Where to use this on MetricKit
Calculators
- LTV Calculator: Estimate customer Lifetime Value (LTV) using ARPA, gross margin, and churn rate.
- LTV Sensitivity Calculator: See how gross profit LTV changes as churn and gross margin vary (simple 3x3 sensitivity).
- LTV:CAC Calculator: Compute LTV:CAC ratio and CAC payback using ARPA, gross margin, churn, and CAC.
- CAC Payback Period Calculator: Estimate how many months it takes to recover CAC (months to recover CAC) using gross profit.
- CAC Payback Sensitivity Calculator: See how CAC payback months change as ARPA and gross margin vary (simple 3x3 sensitivity).
Guides
- Retention & churn hub: cohorts, GRR/NRR, and retention curves: A practical hub for retention measurement: churn rate, GRR/NRR, cohort retention curves, and how to set retention targets without getting misled by noise.
- Sales ops metrics hub: quota, pipeline, win rate, and capacity planning: A practical hub for sales ops planning: quota attainment, pipeline coverage, required pipeline, sales capacity with ramp, and OTE math.