Net New MRR

Net new MRR is the single number that tells you whether your business actually grew this month. It takes all four MRR movements, adds the gains, subtracts the losses, and gives you the net result. Positive means you're growing. Negative means you're shrinking, even if you added new customers.

Net new MRR formula

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

Here's an example. You start the month with $50,000 in MRR. During the month:

• New MRR: $4,000 from new customers
• Expansion MRR: $2,000 from upgrades and add-ons
• Contraction MRR: $800 from downgrades
• Churned MRR: $2,200 from cancellations and failed payments

Net new MRR = $4,000 + $2,000 − $800 − $2,200 = $3,000. Your MRR grew from $50,000 to $53,000. That's real growth.

What net new MRR tells you

Top-line customer numbers can be misleading. You might sign 50 new customers but still shrink if enough existing ones downgrade or leave. We've seen founders celebrate record sign-up months while their MRR quietly shrank. Net new MRR strips away that noise and shows what actually happened to your revenue.

It's also more useful than looking at revenue churn alone, because it includes the growth side of the equation. A business with 5% revenue churn and strong expansion looks very different from one with 5% churn and no expansion at all.

How to improve net new MRR

There are two sides to the formula. Grow the positives and shrink the negatives.

On the growth side: invest in acquisition for new MRR and build pricing that encourages natural expansion. Usage-based models, seat-based scaling, and well-designed feature tiers all drive expansion MRR over time.

On the loss side: understand why customers downgrade and fix the root causes. But the fastest win is often on the churned MRR line. Recurly's data shows 20 to 40% of churn is involuntary, driven by failed payments rather than deliberate cancellations. Those are customers who didn't choose to leave. Recovering that revenue through dunning directly reduces your churned MRR component and lifts net new MRR without any extra acquisition spend.