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Net New MRR
The real growth number: new + expansion − contraction − churn.
Decomposes monthly growth into its four moving parts. A growing MRR can hide a leaky funnel if expansion is masking heavy churn — Net New MRR forces you to see each component.
Formula
Net New MRR = New + Expansion − Contraction − ChurnWorked example
New $5,000 + Expansion $1,500 − Contraction $400 − Churn $2,100 = Net New MRR $4,000 (positive but lossy: 30% of new is being eaten by churn).
Benchmark
Composition healthExpansion-led
Expansion > Churn
New-led
New >> all others
Churn ≥ New
Bleeding out
Why it matters
Founders staring only at MRR miss the composition story. If expansion is consistently bigger than churn, you have a real product. If new sales are masking heavy churn, you're running on a hamster wheel — paid acquisition keeps growth alive while the bucket leaks.
Common mistakes
- Conflating downgrades (contraction) with churn — they're recoverable differently.
- Not tracking reactivations separately — they're a leading indicator of win-back program ROI.
- Looking only at the headline net number instead of the four components.
Tracked in FlowMRR
Dashboard → MRR Breakdown card: new, expansion, contraction, churn and reactivation, month by month.
