Definition
Net new MRR is the change in MRR in a period after expansions, contractions, and churn. It combines growth and retention movements.
Formula
Net new MRR = new MRR + expansion MRR - contraction MRR - churned MRR
Example
If new MRR is $40k, expansion is $15k, contraction is $5k, and churned MRR is $10k, net new MRR = $40k+$15k-$5k-$10k = $40k.
How to use it
- Track net new MRR by segment to find durable growth sources.
- Pair with churn/retention to diagnose whether growth is leaky.
- Use consistent definitions across months for clean trend analysis.
Common mistakes
- Mixing MRR (run-rate) with billings or cash (timing differs).
- Counting reactivations inconsistently (treat them consistently as new or separate).
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 "Net New MRR" 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.
- Use a calculator that references this term (e.g., Net New MRR Calculator) to sanity-check assumptions.
- Read the related guide (e.g., MRR waterfall: reconcile starting MRR to ending MRR) for context and common pitfalls.
Where to use this on MetricKit
Calculators
- Net New MRR Calculator: Calculate net new MRR from new, expansion, contraction, and churned MRR.
- MRR Waterfall Calculator: Build an MRR waterfall: starting MRR + new + expansion - contraction - churn = ending MRR.
- MRR Forecast Calculator: Forecast MRR over time using new MRR plus expansion, contraction, and churn rates.
Guides
- MRR waterfall: reconcile starting MRR to ending MRR: A practical MRR waterfall guide: starting MRR + new + expansion - contraction - churn = ending MRR, with an example and pitfalls.
- 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.
- MRR: what it means (and how to track it cleanly): A guide to MRR: definitions, what to include/exclude, and how to decompose MRR changes over time.
- MRR forecasting: a simple bridge model (new, expansion, churn): A practical way to forecast MRR using a monthly bridge: starting MRR + new MRR + expansion - contraction - churn.