MRR Lab

MRR Ceiling Calculator

Calculate your SaaS company's theoretical maximum MRR based on current growth and churn metrics.

$100k
$20k

The MRR Ceiling Calculator helps you understand the theoretical maximum Monthly Recurring Revenue (MRR) your SaaS company can achieve with your current metrics. This ceiling exists because at some point, the revenue lost from churned and contracted customers will equal the revenue gained from new and expanded customers.

Note with Net Negative Churn

For this calculator to work properly, your net churn rate (expansion - contraction - churn) must be negative. In other words:

expansion_rate < (contraction_rate + churn_rate)

This is typical for most SaaS businesses, where churn and contraction together outweigh expansion. If your expansion rate is higher than your combined churn and contraction rates (net negative churn), you don't have a growth ceiling - your MRR can theoretically grow indefinitely without acquiring new customers.

In practice, you will always need to acquire new customers. As existing customers churn there will be fewer accounts to expand. So MRR expansion will become harder.

How to Use

  1. Enter your current MRR
  2. Enter your new MRR per month (from new customers)
  3. Enter your monthly churn rate
  4. Optionally adjust advanced settings:
    • Monthly expansion rate (from existing customers growing)
    • Monthly contraction rate (from existing customers reducing)

The calculator will show:

  • Your MRR growth trajectory
  • The theoretical MRR ceiling (if you have net positive churn)
  • Estimated months to reach the ceiling
  • Growth efficiency metrics

Understanding the Results

The MRR ceiling is calculated as:

ceiling_mrr = new_mrr / |expansion_rate - (contraction_rate + churn_rate)|

Where:

  • new_mrr is your monthly new MRR from new customers
  • expansion_rate is your monthly expansion rate
  • contraction_rate is your monthly contraction rate
  • churn_rate is your monthly churn rate

Note: If your expansion rate exceeds your combined contraction and churn rates, there is no ceiling because your existing customer base will grow indefinitely even without new customers.

Common Mistakes to Avoid

  1. Using annual rates instead of monthly rates
  2. Including expansion MRR in new MRR
  3. Not accounting for contraction separately from churn
  4. Using net churn rate directly without breaking it down

Optimization Strategies

To raise your MRR ceiling:

  1. Increase new MRR per month
  2. Reduce churn rate
  3. Reduce contraction rate
  4. Increase expansion rate

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