SaaS Expansion Revenue (MRR) Calculator

Think of SaaS expansion revenue as the growth in the monthly income derived from existing customers. This shows the benefit of the service and increases the amount of recurring revenue.

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    Strategic Value Impact

    Expansion MRR shows which upgrades or add-ons customers value most, guiding investment decisions.

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    Operational Impact Focus

    Tracking expansion MRR allows teams to focus on upselling and cross-selling, directly impacting revenue targets.

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    Growth Through MRR

    Increasing expansion MRR is a key way to boost revenue without solely relying on new customer acquisition.

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SaaS Expansion Revenue (MRR)

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SaaS Expansion Revenue (MRR) is calculated by adding Upsell Revenue, Cross-sell Revenue, and Add-on Revenue. This metric helps track additional revenue generated from existing customers through various expansion strategies.

How to Calculate SaaS Expansion Revenue (MRR)

To calculate your SaaS expansion revenue, follow these steps: 

  1. Identify Upsell Revenue: Determine the total monthly recurring revenue gained from existing customers upgrading to higher-priced plans. This can usually be found in your sales or financial reporting systems. For example, a small SaaS company might have $3,000 in upsell revenue, while a larger company might have $25,000.
  2. Identify Cross-sell Revenue: Find the total monthly recurring revenue from existing customers purchasing additional products or services. Check your sales data, or your customer purchase history for this number. A small company might have $1,000 in cross-sell revenue, and a large company might see $15,000.
  3. Identify Add-on Revenue: Calculate the monthly recurring revenue generated from existing customers purchasing add-ons or additional features to their current plans. Review your sales or product usage data to gather this information. For example, a small business might see $500 in add-on revenue, while a larger one might see $5,000.
  4. Calculate Expansion Revenue (MRR): Add  your Upsell Revenue, Cross-sell Revenue, and Add-on Revenue to find your total SaaS Expansion MRR. So, using the above examples, a small company’s expansion revenue would be $3,000 + $1,000 + $500 = $4,500; while the larger company’s expansion revenue would be $25,000 + $15,000 + $5,000 = $45,000.

SaaS Expansion Revenue (MRR) = (Upsell Revenue + Cross-sell Revenue + Add-on Revenue)

Understanding SaaS Expansion Revenue (MRR)

Ioana Grigorescu

January 6, 2025

What is SaaS Expansion Revenue?

SaaS expansion revenue refers to the additional income a company earns when existing customers upgrade their products or purchase additional services. It primarily includes revenue from upselling and cross-selling, methods employed to boost sales among current clients without necessarily introducing new products. This dynamic revenue growth signals a robust and healthy SaaS business.

  • Accelerate revenue growth by increasing value from existing customers.

  • Guide product development by revealing what customers will pay more for.

  • Identify upsell and cross-sell opportunities by tracking client product usage.

Practical Examples of SaaS Expansion Revenue

  • Example 1: A SaaS company with 100 customers at $50/month loses 20 customers to a $70/month plan, resulting in an Expansion MRR of $400. This demonstrates how customer upgrades can directly increase monthly revenue.
  • Example 2: Another SaaS company has 500 customers at a $20/month rate; 50 of them purchase an add-on for $10/month, leading to an Expansion MRR of $500. Add-ons prove to be a viable method for boosting revenue.
  • Example 3: A company with 200 customers at $100/month loses 10 customers to an additional service costing $30/month and gains 5 customers to a $150/month plan, with a total Expansion MRR of $550. This example underlines how both upgrades and add-ons can effectively enhance revenue.
Time Period Starting MRR Expansion MRR Total MRR Change in Total MRR % Change in Total MRR
Month 1 $50,000 $5,000 $55,000 – –
Month 2 $55,000 $7,000 $62,000 +$7,000 +12.73%
Month 3 $62,000 $8,000 $70,000 +$8,000 +12.9%

This table illustrates how Expansion MRR contributes to overall MRR growth over three months. The data shows a positive trend in both Expansion MRR and total MRR, with a clear percentage change each month.

The trend analysis shows a consistent increase in Expansion MRR, which drives overall MRR growth. This indicates a healthy expansion strategy. The percentage change in MRR is also increasing, which can be a signal of improving expansion performance over time.

SaaS Expansion Revenue (MRR) = ($10,000 – $8,000) = $2,000

Different Ways to Calculate SaaS Expansion Revenue (MRR)

  • Gross Expansion MRR: Measures the increase in MRR due to existing customers upgrading their subscriptions or adding new products. Practical application: See the potential of upselling and cross-selling.
  • Net Expansion MRR: Reflects the change in MRR considering both gross expansion and the effect of customers leaving (churn or downgrades). Practical application: This provides a clear picture of the growth derived exclusively from existing customers.
  • Expansion MRR Growth Rate: Calculates the expansion MRR as a percentage of the total MRR at the start of the period. Practical application: Useful for gauging the effectiveness of expansion strategies relative to the overall business size.

How to Improve Your SaaS Expansion Revenue

  • Identify Upselling Opportunities: Regularly analyze customer usage to spot potential upsells. Set alerts for your sales team when a user’s activity reaches a certain threshold, enabling them to suggest suitable upgrades or add-ons.
  • Simplify the Upgrade Process: Ensure that customers can upgrade their plan or purchase add-ons quickly and effortlessly, directly within your application with just a few clicks.
  • Develop Relevant Add-ons: Continuously create and refine features that complement your existing offerings. Promote these to users based on their usage patterns through in-app messages, emails, or personalized recommendations.
  • Focus on Customer Success: Monitor customer satisfaction and usage to ensure they are gaining maximum value from your product. Keep track of both churn and expansion to understand customer behavior, which will inform your strategy to enhance SaaS expansion revenue.

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