Definition
Expansion MRR is added recurring revenue from existing customers (upsells, upgrades, seat growth, add-ons). It drives high NRR.
How to use it
- Track expansion MRR by cohort and segment to find repeatable expansion.
- Separate expansion from reactivations and price increases for clean reporting.
Common mistakes
- Counting expansion as retention without also tracking GRR (NRR can hide churn).
- Mixing price-driven expansions with true usage expansion (separate when possible).
Measured as
Measure Expansion MRR on the same customer segment, time window, and revenue basis each time you review it.
Misused when
- Counting expansion as retention without also tracking GRR (NRR can hide churn).
- Mixing price-driven expansions with true usage expansion (separate when possible).
Operator takeaway
- Track expansion MRR by cohort and segment to find repeatable expansion.
- Separate expansion from reactivations and price increases for clean reporting.
- Keep Expansion MRR 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
- Quantify the impact with NRR Calculator if you need to turn the definition into an operating assumption.
- Read NRR (Net Revenue Retention): definition, formula, how to calculate if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
Where to use this on MetricKit
Calculators
- NRR Calculator: Calculate Net Revenue Retention (NRR) from starting MRR and revenue movements.
- NRR vs GRR Calculator: Calculate NRR and GRR together from the same starting MRR and expansion/contraction/churn inputs.
- MRR Forecast Calculator: Monthly Projection, Formula, and Example: Project future MRR using new MRR, expansion, contraction, churn, and time horizon inputs with a simple monthly forecast model.
- Revenue Retention Curve Calculator: Model GRR and NRR over time from monthly expansion, contraction, and churn assumptions (existing cohort only).
- Cohort Payback Curve Calculator: Estimate when a cohort pays back CAC using a simple retention curve (two-stage churn) and optional expansion.
Guides
- NRR (Net Revenue Retention): definition, formula, how to calculate: NRR explained: what net revenue retention measures, the NRR formula, how to calculate it by cohort, and common mistakes.
- 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.
- NRR vs GRR: differences, formulas, and how to use both: NRR includes expansion; GRR excludes it. Learn when each metric matters, how to compute both from the same cohort, and how to interpret the gap.
- MRR Forecast Formula: Example, Template, and Monthly Bridge: Learn how to forecast MRR with a monthly bridge model using starting MRR, new MRR, expansion, contraction, and churn.
- Revenue retention curves: GRR vs NRR over time (how to model): A practical guide to revenue retention curves: how GRR and NRR compound, how to interpret expansion vs churn, and how to avoid common mistakes.