Expansion Revenue as a Percentage of New Revenue
Date created: Oct 12, 2022 • Last updated: Oct 12, 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
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
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
Expansion Revenue as a Percentage of New Revenue
Line Chart
Summary Chart
Expansion Revenue as a Percentage of New Revenue
Chart
Measuring Expansion Revenue as a Percentage of New RevenueMore 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.
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