Definition
Expansion rate measures how much additional recurring revenue comes from existing customers (upgrades, add-ons, more seats) over a period.
How to use it
- Track expansion by cohort to separate durable expansion from one-off spikes.
- Use expansion rate with GRR to understand whether growth is leaky or durable.
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 "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
- Customer Lifetime Calculator: Estimate customer lifetime (months) from monthly churn rate (a simple approximation).
- MRR Forecast Calculator: Forecast MRR over time using new MRR plus expansion, contraction, and churn rates.
- Blended CAC Calculator: Compare paid-only CAC vs fully-loaded (blended) CAC, and estimate payback at a target margin.
- Cohort LTV Forecast Calculator: Estimate cohort-based LTV using churn, expansion, gross margin, and optional discounting.
- Price Increase Break-even Calculator: Estimate the maximum churn (immediate or ongoing) a price increase can tolerate before it destroys revenue.
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.
- Unit economics hub: CAC, LTV, payback, and runway (a practical stack): A practical hub for unit economics: CAC, fully-loaded CAC, LTV, payback, margin impacts, burn multiple, and runway planning.