Expansion revenue is the incremental revenue generated from existing customers through upsells, cross-sells, seat expansion, usage growth, and pricing increases on existing contracts. It is considered the most-valuable form of growth at SaaS companies because it requires minimal customer acquisition cost (the customer is already acquired), produces high gross margins, and signals product-market fit (customers wanting more). Expansion revenue is a primary driver of Net Revenue Retention, a key SaaS valuation determinant, and is the growth motion that distinguishes companies with expanding accounts from companies stuck at flat ACVs.
The sources of expansion revenue:
Seat expansion: more users from the same customer.
Tier upg...