Article · 7 min read

Expansion MRR: Definition, Formula, and Impact on SaaS Growth

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The cleanest definition of expansion MRR with the formula and the benchmark that matters: top companies get up to 40 percent of new ARR from existing customers.

  • Established subscription businesses run 10 to 30 percent annual expansion rates.
  • Some companies get up to 40 percent of their new ARR from existing customers rather than new logos.
  • Expansion MRR rate = (end-of-month expansion MRR minus start) divided by start, times 100.
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It answers 5 questions

  1. What is net revenue retention and why does every investor keep asking me for it?
  2. What does land and expand mean, and does it apply to my company?
  3. How do I spot which accounts are actually ready to expand?
  4. How do I run an upsell conversation without sounding like I am shaking them down?
  5. Does usage-based pricing really lift expansion, and should we switch?

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