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Contraction Revenue Calculator

Work out contraction revenue instantly with clear inputs, formula shown and shareable results.

About Contraction Revenue Calculator

Contraction is revenue lost from customers who stay but spend less. It is an early warning of churn, because accounts usually shrink before they cancel entirely.

Formula

Contraction rate

Contraction MRR = downgrades + seat reductions + discounts; rate = contraction / starting MRR

Worked example

With the default values below, Contraction Revenue Calculator returns Total Contraction Revenue of $270,000.00. Change any input above and every figure here is recalculated in your browser.

Inputs used

Starting Monthly Recurring Revenueminimum 0
4,500,000
Revenue Lost To Tier Downgradesminimum 0
130,000
Revenue Lost To Seat Reductionsminimum 0
95,000
Revenue Lost To Discounts Grantedminimum 0
45,000

Results

Total Contraction Revenue
$270,000.00
Contraction Rate On Starting Revenue
6.000%
Annualised Revenue Loss
$3,240,000.00
Largest Contraction Driver
Tier downgrades

Step by step

  1. 1Values used
  2. 2Contraction rate
  3. 3Total Contraction Revenue= 270,000.00
  4. 4Contraction Rate On Starting Revenue= 6.000
  5. 5Annualised Revenue Loss= 3,240,000.00
  6. 6Largest Contraction Driver= Tier downgrades

Assumptions and limits

  • The result is derived only from the 4 inputs listed above. Anything not among them is not part of the calculation.
  • In particular, this calculator does not take inflation, tax, fees or charges or compounding frequency into account.
  • Figures are rounded for display to 3 decimal places, so totals built from several rounded parts can differ slightly from the unrounded arithmetic.
  • Figures are estimates based on the inputs given. Marketing performance, platform fees and conversion behaviour vary by audience, channel and season. Use this as a planning guide, not a forecast.
  • This is an estimate for general information and not professional financial, tax or legal advice. See the full disclaimer for the limits that apply to this kind of calculator.

How these calculators are built and tested is described on the Methodology page. If a figure looks wrong, please report it.

Figures are estimates based on the inputs given. Marketing performance, platform fees and conversion behaviour vary by audience, channel and season. Use this as a planning guide, not a forecast.

Frequently Asked Questions

Why track contraction separately from churn?

Because the customer is still engaged and recoverable. Contraction is a solvable problem; churn is usually not.

Are discounts really contraction?

Yes in revenue terms. A permanent concession reduces recurring revenue exactly as a downgrade does.

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