What is Expansion Revenue?
Definition
Additional revenue generated from existing subscribers through upgrades, add-ons, or increased usage beyond their initial plan.
Understanding Expansion Revenue
Expansion revenue is revenue growth from your existing customer base, without acquiring new customers. It includes plan upgrades, additional seat purchases, add-on features, and usage overage. For healthy SaaS companies, expansion revenue should offset churn — leading to net revenue retention above 100%.
Common expansion strategies include usage-based pricing tiers, premium feature add-ons, and team plan upgrades. For consumers, expansion revenue opportunities from your subscriptions mean more upsell prompts and encouragement to upgrade.
Related Terms
Net Revenue Retention
A metric measuring the percentage of recurring revenue retained from existing customers, including expansions, contractions, and churn.
Upsell
A sales technique where a subscription service encourages existing users to upgrade to a higher-priced plan with more features.
MRR
Monthly Recurring Revenue — the predictable total revenue a subscription business expects to earn each month from all active subscriptions.
ARPU
Average Revenue Per User — the average monthly or annual revenue generated per subscriber, calculated by dividing total revenue by total subscribers.