Transparent method
The formula
Worked example
Example inputs
How to interpret the result
Ending MRR moves from four separate components working in different directions at once, new business, expansion from existing customers, contraction, and churn, and reconciling all four consistently under one clear revenue policy is what makes the resulting net growth rate actually mean something comparable from period to period.
Before you rely on it
What to check
Confirm new, expansion, contraction and churn are each classified under one consistent revenue policy applied the same way every period, since a policy shift between periods distorts period-to-period growth comparisons.
The common error
Where people go wrong with MRR growth calculator
Comparing net growth rates across periods when the underlying revenue-policy classification changed between them. A definitional shift, not an actual change in the business, can be what's really driving an apparent swing in the growth rate.
Sensitivity evidence
How beginning MRR changes the net MRR growth rate
| Beginning MRR | Net MRR growth rate | Ending MRR | Net new MRR |
|---|---|---|---|
| $80,000 | 16.3% | $93,000 | $13,000 |
| $90,000 | 14.4% | $103,000 | $13,000 |
| $100,000worked example | 13.0% | $113,000 | $13,000 |
| $110,000 | 11.8% | $123,000 | $13,000 |
| $120,000 | 10.8% | $133,000 | $13,000 |
Every input, tested
Which input moves the net MRR growth rate most
| Input | Tested from | To | Net MRR growth rate at each end | Swing |
|---|---|---|---|---|
| New-logo MRR | $13,500 | $16,500 | 11.5% to 14.5% | 3.0% (23%) |
| Beginning MRR | $90,000 | $110,000 | 14.4% to 11.8% | 2.6% (20%) |
| Expansion MRR | $6,300 | $7,700 | 12.3% to 13.7% | 1.4% (11%) |
| Churned MRR | $5,400 | $6,600 | 13.6% to 12.4% | 1.2% (9.2%) |
| Contraction MRR | $2,700 | $3,300 | 13.3% to 12.7% | 0.600% (4.6%) |
Two variables at once
Net MRR growth rate by beginning MRR and new-logo MRR
| Beginning MRR \ New-logo MRR | $12,000 | $15,000 | $18,000 |
|---|---|---|---|
| $80,000 | 12.5% | 16.3% | 20.0% |
| $90,000 | 11.1% | 14.4% | 17.8% |
| $100,000 | 10.0% | 13.0% | 16.0% |
| $110,000 | 9.1% | 11.8% | 14.5% |
| $120,000 | 8.3% | 10.8% | 13.3% |
Step by step
The worked example, input by input
| Input | Value used |
|---|---|
| Beginning MRR | $100,000 |
| New-logo MRR | $15,000 |
| Expansion MRR | $7,000 |
| Contraction MRR | $3,000 |
| Churned MRR | $6,000 |
| Net MRR growth rate | 13.0% |
| Ending MRR | $113,000 |
| Net new MRR | $13,000 |
Where the inputs come from
Beginning MRR is the monthly recurring revenue at the start of the period. New-logo MRR is from new customers, expansion MRR is from existing customers who add seats or upgrade, contraction is downgrades, and churned MRR is from customers who cancel. Use a consistent month and take the components from your billing data. Reactivations should be counted as new or as a separate line, and you should say which.
When the result stops applying
A monthly growth rate of 13% is exceptional and rarely sustained, so compare it with your own trend and stage. Monthly figures are noisy for small companies. Annual contracts create lumpy MRR changes. Growth rates of small bases look large.
What to compare it with
See the base on the MRR and ARR calculator, retention on the net and gross revenue retention pages, and churn on the SaaS churn calculator. The Rule of 40 and magic number pages judge growth efficiency. The CAC payback calculator shows how quickly growth spending returns.
People also ask
Frequently asked questions
What is a good MRR growth rate?
Early-stage companies often aim for 10% to 20% a month, and mature companies grow much more slowly. Compare it with your stage and the year-over-year trend.
What is net new MRR?
New, expansion and reactivation MRR minus contraction and churn, so it shows the net change in recurring revenue for the period.
Why track expansion separately?
Expansion from existing customers costs less than acquiring new ones and shows whether customers find more value over time.