What is expansion rate?
Expansion rate is the share of your starting MRR that existing customers added through upgrades in a period. A customer moving to a higher plan, adding seats or buying an add-on all count.
It answers one question: how much does your installed base grow on its own? New customers are left out on purpose. So is any revenue you lost, which belongs to contraction and churn.
The expansion rate formula
Worked example
A hypothetical company starts March at $40,000 MRR. During March, three customers add seats and one moves to a higher plan, adding $1,200 of MRR between them.
At $40,000 MRR this company sits in the $10K–$50K tier. The benchmark median there is 1.1% a month and the top 25% starts at 2.9%, so 3.0% is a strong month. One month proves little: track it over at least a quarter before reading a trend.
Why expansion rate matters
Expansion is the only way existing customers can grow your revenue without new sales. It is what pushes net revenue retention above 100%. If expansion outpaces contraction and churn, your base grows even in a month with no new signups.
It also tells you whether your pricing leaves room to grow. Seat-based and usage-based plans expand naturally as customers grow. A single flat plan with no higher tier gives customers nothing to upgrade to, and expansion stays near zero no matter how happy they are.
Where it comes from on Stripe
On Stripe, expansion shows up as subscription changes that raise the recurring amount: a price change to a more expensive plan, a higher quantity or a new recurring item. North Metric tracks these as expansion MRR in MRR Movement, the waterfall this rate is built from.
Expansion rate vs NRR
| Expansion rate | NRR | |
|---|---|---|
| What it counts | Upgrades from existing customers | Upgrades, reactivation, downgrades and churn |
| Includes losses | No | Yes |
| Can be negative | No | Falls below 100% when losses win |
| Best for | Seeing whether pricing and product create room to grow | Overall health of the existing base |
A rough way to read them together: NRR minus GRR is roughly the share of revenue added by expansion and reactivation. A high expansion rate with a low GRR means upsell is hiding a churn problem.
Common expansion rate mistakes
- Counting new customers. A new subscription is new business, even if the customer chose your largest plan.
- Counting reactivations. A returning customer is reactivation, not expansion. Counting both overstates growth from your base.
- Netting out downgrades. Expansion rate is gross. Subtracting downgrades turns it into a net number and hides both movements.
- Annual plans upgraded mid-term. Normalize the change to monthly MRR first. A $1,200 increase on an annual plan is $100 of MRR, not $1,200.
Expansion rate benchmarks
Benchmarks by revenue stage, compiled from published SaaS studies and North Metric’s own analysis. For expansion rate, the annual figures were derived as NRR minus GRR, then converted to monthly rates, so they are a guide rather than measured monthly data.
| Stage · MRR | Bottom 25% | Median | Top 25% |
|---|---|---|---|
| Seed · < $10K | 0.0% | 0.9% | 2.9% |
| Early · $10K – $50K | 0.2% | 1.1% | 2.9% |
| Growth · $50K – $100K | 0.3% | 1.1% | 2.9% |
| Scale · $100K – $500K | 0.6% | 1.4% | 3.2% |
| Enterprise · $500K+ | 1.0% | 1.9% | 3.5% |
Frequently asked questions
Is a 1% monthly expansion rate good?
It is about the median for most stages. The benchmark medians are 0.9% a month below $10K MRR, 1.1% from $10K to $100K MRR, 1.4% from $100K to $500K and 1.9% above $500K. The top 25% starts near 2.9% a month for companies under $100K MRR. These are monthly figures converted from annual studies, so treat them as a guide, not a target.
What is the difference between expansion rate and expansion MRR?
Expansion MRR is the dollar amount existing customers added through upgrades in a period. Expansion rate divides that amount by the MRR you started the period with, so you can compare months and companies of different sizes.
Does expansion rate include new customers?
No. It only counts extra revenue from customers who were already paying at the start of the period. New subscriptions are new business, tracked in MRR Movement.
Does reactivation count as expansion?
No. A customer who canceled and came back is reactivation, a separate line. Expansion rate only counts upgrades from customers who never left. See reactivation rate.
From metric to action
North Metric ranks your paying Stripe customers by money at risk, so you see who is likely to leave before this number moves. See how churn prediction works.