Calculateur de Taux de Contraction — Formule

How to Calculate Contraction Rate

Formula

Contraction Rate = (Contraction MRR / Starting MRR) x 100

Contraction measures the revenue you lose from existing customers who stay but spend less. This happens when customers downgrade their plan, remove seats, reduce usage on metered billing, or receive discounts. Contraction is softer than full churn, but it still erodes your revenue base and deserves close tracking.

Exemple Résolu

A company starts with $200,000 MRR and loses $8,000 from customer downgrades.

  1. Contraction Rate = ($8,000 / $200,000) x 100 = 4%
  2. Annualized Contraction = $8,000 x 12 = $96,000
  3. 4% of existing MRR contracted due to downgrades.