Is Contraction MRR the same as Churned MRR?

No—Contraction MRR is typically revenue lost because existing customers downgrade or remove seats/add-ons, while Churned MRR is revenue lost when customers cancel entirely. Use Contraction to track downsells; use Churned MRR to track cancellations.

How do I calculate contraction rate from actual downgrades?

Add up the MRR lost from downgrades/downsells in the period, then divide by Starting MRR: Contraction Rate = Contraction MRR ÷ Starting MRR

Do discounts, paused subscriptions, or removed add-ons count as contraction?

If the change reduces recurring revenue from an existing customer for the period (discount applied, add-on removed, plan downgraded, subscription paused), treat it as contraction for that period.

How does Contraction MRR affect NRR/GRR and retention reporting?

Contraction directly lowers retention—GRR typically subtracts churn and contractions from Beginning MRR, and NRR adds expansion back in: GRR = (Beginning MRR − Churn MRR − Contraction MRR) ÷ Beginning MRR and NRR = (Starting MRR − Churn MRR − Contraction MRR + Expansion MRR) ÷ Starting MRR.

Contraction MRR Calculator (Downgrades + Churn)

Contraction MRR Calculator

Calculate Contraction MRR (downgrades from existing customers) and the resulting Ending MRR for a selected period. Note: “Contraction MRR” here is the dollar change over the selected period (non-compounded), not necessarily a monthly run-rate when Period is Quarterly/Annual.

Inputs

Starting MRR (existing customers)

Period

Enter using

Contraction rate (for the selected period)

Contraction MRR (existing customers, for the selected period)

Results

Contraction (existing customers, for the selected period) $
Ending MRR (existing customers) $
Contraction rate (computed) %

What is Contraction MRR?

Contraction MRR is the decrease in recurring revenue from your existing customer base caused by customers paying less than before (downgrades, seat reductions, plan changes, credits).

It matters because contraction weakens revenue quality and predictability, pressures Gross Revenue Retention (GRR) and Net Revenue Retention (NRR), and can impair LTV:CAC, CAC Payback Period, and long-range ARR planning.

Formula

Example

Starting MRR (existing customers): $75,000

Period: Monthly

Contraction rate: 2%

Interpretation: $1,500 of recurring revenue leaked from the existing base due to downgrades, leaving $73,500 of existing-customer MRR before considering Expansion MRR, Churned MRR, and New MRR.

How to Use the Contraction MRR Calculator

Enter your starting MRR from existing customers, pick the period you’re measuring, then input either a contraction rate or amount to instantly see contraction MRR and the ending existing-customer MRR.

Add Starting MRR (existing customers)
- Enter the MRR you had at the start of the period for your existing customer base (exclude new customer MRR).
Select the Period
- Choose Monthly (or your available option) so your contraction input matches the same time window.
Choose how you want to input contraction
- Use “Enter using” to pick either Contraction rate (%) or Contraction amount ($) (depending on what you know).
Enter the Contraction rate or amount
- If using rate, enter the % contraction for that period and the calculator will compute:
Read the Results (and sanity-check)
- - Review Contraction (existing customers, for the selected period) and Ending MRR (existing customers)
- Use the “What it means?” text as a quick interpretation, but rely on your own thresholds and trend over time.

Frequently Asked Questions

No—Contraction MRR is typically revenue lost because existing customers downgrade or remove seats/add-ons, while Churned MRR is revenue lost when customers cancel entirely. Use Contraction to track downsells; use Churned MRR to track cancellations.
Add up the MRR lost from downgrades/downsells in the period, then divide by Starting MRR: Contraction Rate = Contraction MRR ÷ Starting MRR
If the change reduces recurring revenue from an existing customer for the period (discount applied, add-on removed, plan downgraded, subscription paused), treat it as contraction for that period.
Contraction directly lowers retention—GRR typically subtracts churn and contractions from Beginning MRR, and NRR adds expansion back in: GRR = (Beginning MRR − Churn MRR − Contraction MRR) ÷ Beginning MRR and NRR = (Starting MRR − Churn MRR − Contraction MRR + Expansion MRR) ÷ Starting MRR.

Methodology & Sources

Bibliography

Jerusha Songate (2021). What is Contraction Monthly Recurring Revenue? — Baremetrics https://baremetrics.com/blog/what-is-contraction-monthly-recurring-revenue
Accessed 2025-12-15
Sid Jain (2022). Understanding and Benchmarking Your MRR Movements — ChartMogul https://chartmogul.com/blog/understanding-mrr-movements/
Accessed 2025-12-15
Sandy Diao; Shuo Chen (2025). How to Build and Grow a SaaS Startup — Stanford University https://continuingstudies.stanford.edu/courses/professional-and-personal-development/how-to-build-and-grow-a-saas-startup/20252_BUS-144
Accessed 2025-12-15

Contraction MRR (Downgrade MRR) Calculator

Contraction MRR Calculator

Inputs

Results

What It Means?

What is Contraction MRR?

Formula

Example

How to Use the Contraction MRR Calculator

Add Starting MRR (existing customers)

Select the Period

Choose how you want to input contraction

Enter the Contraction rate or amount

Read the Results (and sanity-check)

Frequently Asked Questions

Methodology & Sources

Bibliography

Contraction MRR Calculator

Inputs

Results

What It Means?

What is Contraction MRR?

Formula

Example

How to Use the Contraction MRR Calculator

Add Starting MRR (existing customers)

Select the Period

Choose how you want to input contraction

Enter the Contraction rate or amount

Read the Results (and sanity-check)

Frequently Asked Questions

Methodology & Sources

Bibliography

Other Calculators in SaaS Metrics

Net MRR Churn (Rate) Calculator

Churned MRR (Cancellation MRR) Calculator

Expansion MRR Rate Calculator

Net Revenue Retention (NRR) Calculator

Gross Revenue Retention Calculator

Net New MRR Calculator