Definition
Recurring revenue lost from existing customers downgrading their plan or reducing usage without fully cancelling.
Formula
Sum of MRR decreases from existing customers in a period
How to measure
Compare each existing customer's MRR at the start and end of the period, summing only the negative changes among still-active accounts.
Why track it
Contraction MRR is an early warning sign, since customers who downgrade rather than churn outright often churn fully soon after.
Example
A company reports $3,000 in contraction MRR from five accounts reducing their seat count.
FAQ
- What is Contraction MRR?
- Recurring revenue lost from existing customers downgrading their plan or reducing usage without fully cancelling.
- How do you calculate Contraction MRR?
- Sum of MRR decreases from existing customers in a period
- Why track Contraction MRR?
- Contraction MRR is an early warning sign, since customers who downgrade rather than churn outright often churn fully soon after.