MRR Expansion, %

MRR Expansion % (Monthly Recurring Revenue Expansion percentage) measures how much more money a company is making from its existing customers over time. This increase usually comes from customers upgrading their subscriptions, buying additional services, or using more of what the company offers. It helps show how well the company is growing its revenue from the customers it already has.

How to Calculate MRR Expansion percentage

Basic Formula for MRR Expansion %

MRR Expansion % = (Expansion MRR / MRR at the Start of the Period) × 100

Example:

• May 2024 MRR: $10,000

• June 2024 MRR: $15,000

Step 1: Calculate the Expansion MRR

First, determine how much the MRR increased from May to June. This is your Expansion MRR:

Expansion MRR = June 2024 MRR − May 2024 MRR

Expansion MRR=$15,000−$10,000=$5,000

Step 2: Calculate the MRR Expansion %

Now, use the formula for MRR Expansion %:

MRR Expansion % = (Expansion MRR / MRR at the Start of the Period) × 100

Substitute the values:

MRR Expansion % = ($5,000 / $10,000) × 100 = 50%

Result:

The MRR Expansion % from May 2024 to June 2024 is 50%. This means that the MRR increased by 50% from existing customers between May and June 2024.

Why MRR Expansion % Matters

• Growing Revenue from Current Customers: A high MRR Expansion % means your current customers are spending more, which is great because it’s often cheaper to get existing customers to spend more than to find new ones.
• Stable Revenue: If your MRR Expansion % is high, you can rely on your current customers for steady revenue growth, making your business more stable.
• Customer Satisfaction: If customers are willing to upgrade or buy more, it usually means they’re happy with your product or service.

MRR Expansion % vs. Churn Rate

• MRR Expansion %: Shows how much your revenue is growing from existing customers.
• Churn Rate: Measures how much revenue you’re losing from customers who cancel or downgrade. Ideally, your MRR Expansion % should be higher than your churn rate, so your overall revenue keeps growing.