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.
Measured as
Expansion rate = expanding accounts / total active accounts
Misused when
- Counting renewals without any increase as expansion.
- Blending expansion with new logos in reporting.
Operator takeaway
- Segment by plan or cohort to find expansion levers.
- Pair with expansion revenue to measure depth and breadth.
- Keep Account Expansion Rate consistent by cohort, segment, and period before you use it as a decision signal in planning or reporting.
- Interpret the metric alongside retention, margin, or payback so one ratio does not hide the real operating trade-off.
Next decision
- Read Retention & churn hub: cohorts, GRR/NRR, and retention curves if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
- Decide whether Account Expansion Rate is a growth, retention, or efficiency signal before you set targets around it.
Where to use this on MetricKit
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.