Net new MRR

Q: What is a good net new MRR?

There is no single target number because it scales with your size. What matters is that net new MRR stays positive and grows month over month. Positive and accelerating means you are compounding, flat means you are treading water, and negative means churn and contraction are outpacing new and expansion revenue, so you are shrinking.

Q: How do you calculate net new MRR?

Add new MRR from fresh customers to expansion MRR from existing customers upgrading, then subtract contraction MRR from downgrades and churned MRR from cancellations. For example, 20000 euros new plus 10000 euros expansion minus 2000 euros contraction minus 5000 euros churn equals 23000 euros of net new MRR.

Q: What is the difference between net new MRR and new MRR?

New MRR only counts revenue from brand new customers. Net new MRR captures the full picture by adding expansion and subtracting contraction and churn, so it shows the actual change in your recurring revenue base rather than just gross sales to new accounts.

The real change in your recurring revenue each month — after you add up what you won and subtract what you lost.

In plain English

Your monthly recurring revenue moves in four directions at once: new customers sign up, existing customers upgrade, others downgrade, and some cancel entirely. Net new MRR rolls all four into one figure — the actual amount your recurring revenue grew (or shrank) this month. It's the honest scoreboard, because a big number of new sign-ups means nothing if churn quietly drains an equal amount out the back door. Watching net new MRR over time tells you whether your growth engine is genuinely compounding or just spinning to stand still.

The formula

Net new MRR = New MRR + Expansion MRR − Contraction MRR − Churned MRR

The two positives come from winning and growing accounts; the two negatives come from downgrades and cancellations — and which side wins each month is the whole story.

A worked example

In one month you add €20k in new MRR and €10k in expansion from upgrades. Meanwhile €2k slips away to downgrades (contraction) and €5k is lost to cancellations (churn).

Net new MRR = €20k + €10k − €2k − €5k = €23k

So your recurring revenue base grew by €23k this month. If next month churn jumped to €25k, that same €30k of gross gains would turn into €3k of net new MRR — barely moving the needle — which is exactly why the netted figure matters more than headline new sales.

What's a good net new MRR?

There's no universal "good" number — it scales with your size — so the question is direction, not magnitude. What you want is a figure that's positive and growing:

Net new MRR trend	Verdict	What it means
Positive & growing	Compounding	Gains outrun losses; engine is working
Positive but flat	Treading water	Growth has stalled; check expansion & churn
Negative	Shrinking	Churn & contraction exceed new & expansion

The lever most people overlook is the negative side: cutting churn and contraction adds to net new MRR just as surely as winning new logos, and it's usually cheaper.

Frequently asked questions

What is a good net new MRR?

There's no single target — it scales with your size. What matters is that net new MRR stays positive and grows. Positive and accelerating means you're compounding, flat means treading water, and negative means churn and contraction are outpacing new and expansion revenue, so you're shrinking.

How do you calculate net new MRR?

Add new MRR from fresh customers to expansion MRR from upgrades, then subtract contraction MRR from downgrades and churned MRR from cancellations. For example, €20k new + €10k expansion − €2k contraction − €5k churn = €23k net new MRR.

What's the difference between net new MRR and new MRR?

New MRR only counts revenue from brand-new customers. Net new MRR captures the full picture by adding expansion and subtracting contraction and churn, so it shows the actual change in your recurring revenue base rather than just gross sales to new accounts.

MRR · Expansion revenue · Revenue churn · Quick ratio

Learn more

The complete guide to value-based bidding · Value-based bidding without a data team