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Contraction MRR metric chart view
Contraction MRR metric table view

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What is Contraction MRR?

Contraction MRR is the monthly revenue you lose when existing customers reduce their subscription but don’t cancel. This happens when a customer moves to a cheaper plan, removes seats, or drops an add-on.

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How to Calculate It

Contraction MRR = Previous MRR amount − New MRR amount (for each customer who decreased)
Example: a customer was on the $99/month plan and contracts to $49/month. Contraction MRR = $99 − $49 = $50 If 2 customers contract this month:
  • Customer A: $99 → $49 = $50
  • Customer B: $149 → $99 (removed seats) = $50
Total Contraction MRR = $50 + $50 = $100

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Where It Fits

Contraction MRR is one of five MRR movement types: Net New MRR = New + Expansion + Reactivation − Contraction − Churn Contraction is a warning sign. The customer didn’t leave, but they’re paying less. If contraction keeps growing, churn often follows. Bigdelta tracks Contraction MRR automatically as an activity on each account.

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FAQ

Contraction = customer reduced their plan but stayed. Churn = customer cancelled completely.
Usually. But sometimes a contraction keeps a customer who would have otherwise cancelled. A smaller payment is better than no payment.