Contraction MRR

What is Contraction MRR?

Contraction MRR is the amount of monthly recurring revenue lost when existing customers downgrade to lower-priced plans or reduce their usage. It represents a decrease in revenue from customers who remain with the company, rather than those who churn entirely.

Why It Matters

• It highlights potential issues with pricing tiers or features that may no longer meet customer needs.

• High contraction rates can offset the gains from new customer acquisition and expansion revenue.

• Tracking this metric helps success teams identify accounts that may be at risk of eventually churning.