Definition
Net new MRR is the net change in MRR in a period: new + expansion − churn − contraction.
Answer-first summary
Net New MRR: Net new MRR is the net change in MRR in a period: new + expansion − churn − contraction.
Formula
Net New MRR
Net New MRR = New MRR + Expansion MRR - Churned MRR - Contraction MRR
- New MRR: MRR from new customers
- Expansion MRR: Upsells/seat growth from existing customers
- Churned MRR: MRR lost to cancellations
- Contraction MRR: MRR lost to downgrades
New $20k + expansion $8k − churn $10k − contraction $3k → net new $15k.
How to improve
- Increase new MRR via acquisition and conversion.
- Increase expansion with packaging and CS.
- Reduce churn and contraction.
Common pitfalls
- Not separating churn vs contraction.
- Counting reactivations inconsistently.
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FAQ
- Should reactivated customers count as new MRR?
- Track separately (reactivation MRR) to understand churn recovery.
- Where do upgrades/downgrades fit?
- Upgrades are expansion MRR; downgrades are contraction MRR.
Topic hub
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