How is expansion MRR calculated?

Modified on: Sat, 26 Jun, 2021 at 11:41 PM

Expansion MRR

Expansion MRR is the amount of additional revenue coming from your existing subscriptions. 

The following activities will attribute to the additional recurring revenue:

  • Upsells - moving from a lower-priced plan to a higher-priced plan.

  • Cross-sells - purchasing of additional non-core products offered by the business.

  • Reactivation - reactivating a canceled subscription.

  • Free to Paid MRR - Monthly recurring revenue generated from subscriptions that moved from free to paid plans.

  • Add-ons - purchasing other recurring add-ons that are not a part of the customer’s current subscription plan.

  • Subscription quantity increase. 

Expansion MRR =Total sum of Upgrade MRR, Free to paid MRR, Reactivation MRR as of a specific period

An increase in this number indicates that the revenue generated from your existing customer base is growing. This is great news to know that the business is growing without adding new customers, or without spending on acquiring new customers. It is recommended to keep Expansion MRR higher than the Gross MRR Churn metric.

Often confused with Upgrade MRR, Expansion MRR also takes into account MRR contribution from reactivation of a previously canceled subscription and free-to-paid conversions. In contrast with Upgrade MRR, Expansion MRR also gives a deeper level of understanding of how well you are able to convert free customers to paid customers, and how often canceled subscribers return to you.

M
Monica is the author of this solution article.

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