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How to Calculate Expansion Revenue Rate

Formula

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

Expansion revenue is the additional monthly revenue earned from customers who already pay you, through plan upgrades, seat additions, premium features, or complementary product purchases. A healthy expansion rate can offset churn entirely, leading to net revenue retention above 100%.

Esempio Risolto

A SaaS company with $200,000 starting MRR gains $20,000 in expansion revenue from existing customers.

  1. Expansion Rate = ($20,000 / $200,000) x 100 = 10%
  2. Annualized Expansion = $20,000 x 12 = $240,000
  3. Existing customers are growing their spend by 10% each period.