Expansion Revenue Model
Visualize Net Dollar Retention (NDR). See how upsells and cross-sells can outpace churn, leading to 'Negative Churn' and exponential growth.
Cohort Dynamics
Revenue Layer Cake
Cohort Health
NDR: 101.0%
The Trend
Growing! Your cohort becomes more valuable over time.
Expansion Power
By month 24, Expansion accounts for 58% of revenue.
Total Value
Starting MRR $10000 becomes $14660 in month 24.
Execution Steps
Enter Starting MRR for a cohort.
Set the Monthly Churn Rate (Contraction).
Set the Monthly Expansion Rate (Upsell/Cross-sell).
If Expansion > Churn, you have Net Negative Churn (The Holy Grail).
Pro Strategy
- Focus on Expansion triggers. Usage limits, additional seats, and cross-products are the levers.
- If your NDR is <100%, you are on a treadmill. You must constantly add new customers just to stay flat.
- Expansion revenue is more profitable than new business because CAC is zero.
Core Concepts
Net Dollar Retention (NDR)
The % of revenue retained from a cohort over time, including upgrades. >100% means the business grows even without new customers.
Negative Churn
When expansion revenue exceeds lost revenue from cancellations. This is the secret to hyper-growth SaaS companies.
Land and Expand
Acquiring a customer at a low price (Land) and growing their account value over time (Expand) through seats or features.
What is Expansion Revenue Model?
This tool projects the revenue trajectory of a single customer cohort. It stacks Retained Revenue (decaying over time due to churn) with Expansion Revenue (growing over time due to upsells) to visualize the Net Dollar Retention curve.
Best For
- • Investor presentations (proving NDR).
- • Setting Customer Success goals.
- • Evaluating pricing model scalability.
Limitations
- • Assumes constant rates (churn usually drops over time).
- • Does not account for down-sells separately from churn.
Alternative Methods
LTV Calculator
Calculates total lifetime value, not cohort growth.
SaaS Financial Model
Includes new customer acquisition.
Industry Applications
See how this methodology generates real revenue uplift in different sectors.
Slack
Maintaining growth.
Per-seat billing creates natural expansion as teams grow.
Datadog
Scaling accounts.
Cross-selling new products (Logs, APM) to existing infrastructure users.