Expansion Revenue as a Percentage of New Revenue

Date created: Jul 8, 2021  •   Last updated: Feb 3, 2022

What is Expansion Revenue as a Percentage of New Revenue?

Expansion Revenue as a Percentage of New Revenue measures how much of new revenue comes from expansion. Expansion revenue can be an efficient path to growth because it is not associated with high acquisition costs.

Expansion Revenue as a Percentage of New Revenue Formula

ƒ Sum(Expansion Revenue) / Sum(New Revenue)

How to calculate Expansion Revenue as a Percentage of New Revenue

Say you generate $50,000 new revenue in one month, out of which $15,000 is sourced from upsells and add-ons. You Expansion Revenue as a Percentage of New Revenue for that month is 30%.

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What is a good Expansion Revenue as a Percentage of New Revenue benchmark?

Target for your expansion revenue to be 30% of your total sales to achieve efficient growth.

Expansion Revenue as a Percentage of New Revenue benchmarks

Expansion Revenue as a Percentage of Total Sales

Expansion Revenue as a Percentage of Total Sales
ProfitWell, 2020
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How to visualize Expansion Revenue as a Percentage of New Revenue?

Your first step is to make sure you're tracking all components of MRR on your dashboard, including new revenue, expansion, and reactivation. Then, chose either a line chart or a summary chart to visualize your expansion revenue data points. These examples will give you an idea of what it could look like if you start tracking expansion revenue on a dashboard:

Expansion Revenue as a Percentage of New Revenue visualization examples

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Expansion Revenue as a Percentage of New Revenue

Line Chart

Here's an example of how to visualize your Expansion Revenue as a Percentage of New Revenue data in a line chart over time.
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Expansion Revenue as a Percentage of New Revenue

28%

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1.73

vs previous period

Summary Chart

Here's an example of how to visualize your current Expansion Revenue as a Percentage of New Revenue data in comparison to a previous time period or date range.
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Expansion Revenue as a Percentage of New Revenue

Line Chart

Here's an example of how to visualize your Expansion Revenue as a Percentage of New Revenue data in a line chart over time.

More about Expansion Revenue as a Percentage of New Revenue

Expansion revenue can be considered the key to growth for SaaS companies. Although net new revenue seems attractive, the power of expansion revenue is often overlooked. By focusing your growth strategy on up-sells, cross-sells, and add-on services or product features, you benefit twofold: you strengthen the bond with existing customers by increasing their dependence on your company and generate new revenue without the excessive costs of acquiring new customers.

By tracking Expansion Revenue as a Percentage of New Revenue, you tend to be aware of this ratio. This lets you adjust your sales strategy and approach to focus more on expansion, in cases where the ratio is low. In general, about 10% of total sales is attributed to expansion. However, the target to aim for is around 30% to really see the impact of expansion on your growth.