AdvancedMetric 19 of 35
Expansion Ratio
How much of your growth comes from existing customers expanding.
The share of new growth generated by upsells, seat expansion, usage growth, or plan upgrades relative to new-logo MRR. It is a simple read on whether your business has a land-and-expand engine or depends almost entirely on acquisition.
Formula
Expansion Ratio = Expansion MRR ÷ New MRRWorked example
Expansion MRR $12,000, New MRR $40,000 → Expansion Ratio = 30%.
Benchmark
Growth mixStrong
> 40%
Healthy
15–40%
Acquisition-led
< 10%
Why it matters
Expansion revenue is cheaper than new revenue because the customer is already acquired. A rising Expansion Ratio usually means pricing, seats, usage, or packaging are working. A low ratio is not fatal for early SaaS, but at scale it means growth gets expensive because every dollar must come from a new customer.
Common mistakes
- Counting price increases as expansion without separating true usage or seat growth.
- Comparing self-serve SMB and enterprise expansion ratios directly.
- Ignoring contraction alongside expansion; pair this with NRR or Net New MRR.
Tracked in FlowMRR
Products → Bridge card shows expansion vs. new MRR at the product level.
