Revenue & Retention

Expansion Revenue

Expansion revenue is additional recurring revenue generated from existing customers through upgrades, upsells, cross-sells, or increased usage.

Key Takeaways
  • Expansion revenue measures the increase in recurring revenue from your current customer base, excluding new customer acquisition.
  • Common Mistakes:
  • Including new customer revenue in expansion (expansion is existing customers only).
  • Counting reactivations of churned customers as expansion.
  • Not separating planned price increases from organic expansion.
  • Ignoring usage-based expansion in consumption pricing models.
  • Failing to attribute expansion to specific product features or sales motions.
  • Comparing gross expansion without accounting for contractions.

Definition

Expansion revenue measures the increase in recurring revenue from your current customer base, excluding new customer acquisition.

High expansion rate

Strong land-and-expand motion; customers find increasing value.

Low expansion rate

Limited upsell opportunities or poor expansion execution.

Expansion > Churn

NRR > 100%; revenue grows without new customers.

Formula

Expansion Revenue = Sum of all MRR increases from existing customers

Variables

Upgrades

Customers moving to higher-tier plans.

Add-ons

Additional features or modules purchased.

Seat Expansion

Increased user seats or licenses.

Examples

Monthly expansion revenue

CustomerPrevious MRRNew MRRExpansion
Acme Corp$500$750+$250
Beta Inc$200$500+$300
Gamma LLC$1,000$1,000$0
  1. 1Total expansion = $250 + $300 + $0
  2. 2Expansion revenue = $550
→ Total expansion revenue = $550

Track in Daymark

Data Sources

CSVgoogle sheetspostgreSQL

Required Fields

Customer MRR over time
  • customer_id
  • period
  • mrr
  • plan_tier

Sample Questions

  • What is the monthly expansion revenue?
  • Show expansion revenue trend over the last year
  • Calculate expansion rate as a percentage of starting MRR
  • Which customers expanded the most in current quarter?
  • Break down expansion by type: upgrades vs add-ons vs seats
  • What's our expansion revenue by customer cohort?
  • Compare expansion revenue to new customer revenue
Track expansion

Dashboard Template

1. line
Expansion revenue trend

Monthly expansion MRR

2. stacked bar
Expansion by type

Upgrades vs add-ons vs seats

3. table
Top expanding customers

Largest expansion accounts

4. metric
Expansion rate

Expansion as % of starting MRR

Common Mistakes

  • •Including new customer revenue in expansion (expansion is existing customers only).
  • •Counting reactivations of churned customers as expansion.
  • •Not separating planned price increases from organic expansion.
  • •Ignoring usage-based expansion in consumption pricing models.
  • •Failing to attribute expansion to specific product features or sales motions.
  • •Comparing gross expansion without accounting for contractions.

FAQ

Q: What's a good expansion rate?

Top SaaS companies see 20-40% annual expansion from their customer base. Even 10-15% is solid.

Q: How does expansion revenue affect NRR?

Expansion revenue directly drives NRR above 100%. The higher your expansion, the higher your NRR.

Q: Should price increases count as expansion?

It depends. Automatic price escalations are sometimes excluded; customer-accepted increases are usually included.

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