Contraction MRR Calculator

Contraction MRR is the monthly recurring revenue you lose when existing customers stay with you but spend less, usually by downgrading to a cheaper plan or cutting back the number of seats they pay for. It is different from churn, where a customer leaves entirely, and tracking it separately matters because shrinking accounts often signal a value or pricing problem before they turn into full cancellations. This calculator adds the common sources of contraction together so you can see the total. You enter downgrade MRR from customers moving to lower tiers and seat reduction MRR from teams removing users, then the tool totals them into your contraction MRR. It also divides that total by your starting base MRR to give a contraction rate, which tells you what share of your recurring revenue base is shrinking in the period. Founders, finance teams and customer success leaders use this figure to spot at risk revenue early, because a rising contraction rate can quietly offset strong new and expansion sales. A few good practice tips will help. First, only include existing customers who reduced spend, since customers who left belong in churned MRR. Second, measure contraction over the same period as your other MRR movements so the parts reconcile into net new MRR cleanly. Third, dig into the cause, because seat reductions often reflect team changes while downgrades may point to weak value at higher tiers. Watching contraction MRR each month, alongside churn and expansion, gives you an honest read on the health of your installed base and helps you act before small reductions become lost customers.

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Contraction MRR = downgrade + seat reduction. Rate = contraction / base x 100. Estimate only, not financial or tax advice.