Upsell ARR
Growth
Industry:
SaaS
Short Definition
Upsell ARR is the increase in annual recurring revenue when an existing customer moves to a higher tier/plan of the same product. Count it on the effective (go-live) date, not when it’s signed. Exclude adding a distinct product/module (that’s Cross-sell ARR) and exclude more seats/higher minimums or price-only increases (that’s Add-on ARR).
Short Definition
Upsell ARR is the increase in annual recurring revenue when an existing customer moves to a higher tier/plan of the same product. Count it on the effective (go-live) date, not when it’s signed. Exclude adding a distinct product/module (that’s Cross-sell ARR) and exclude more seats/higher minimums or price-only increases (that’s Add-on ARR).
Short Definition
Upsell ARR is the increase in annual recurring revenue when an existing customer moves to a higher tier/plan of the same product. Count it on the effective (go-live) date, not when it’s signed. Exclude adding a distinct product/module (that’s Cross-sell ARR) and exclude more seats/higher minimums or price-only increases (that’s Add-on ARR).
Why it matters for Investors
Base-driven growth: Shows how much growth comes from customers you already have.
Efficient growth: Upsells usually cost less than winning brand-new logos, improving unit economics.
Pricing power & product fit: Willingness to move up tiers signals strong value and healthy packaging.
Net Revenue Retention lift: Upsell ARR directly boosts Net Revenue Retention, helping offset contraction and logo churn.
Why it matters for Investors
Base-driven growth: Shows how much growth comes from customers you already have.
Efficient growth: Upsells usually cost less than winning brand-new logos, improving unit economics.
Pricing power & product fit: Willingness to move up tiers signals strong value and healthy packaging.
Net Revenue Retention lift: Upsell ARR directly boosts Net Revenue Retention, helping offset contraction and logo churn.
Why it matters for Investors
Base-driven growth: Shows how much growth comes from customers you already have.
Efficient growth: Upsells usually cost less than winning brand-new logos, improving unit economics.
Pricing power & product fit: Willingness to move up tiers signals strong value and healthy packaging.
Net Revenue Retention lift: Upsell ARR directly boosts Net Revenue Retention, helping offset contraction and logo churn.
Formula
Practical considerations:
When to record: On the effective (go-live) date of the tier/plan upgrade. Anything signed for later stays in CARR until it starts.
What counts as upsell: Move to a higher plan/tier (more features/capabilities).
How to measure:
Monthly plans → MRR delta × 12 at the snapshot.
Annual plans → New committed annual price − prior committed annual price (for the tier move).
Ramps: Pre-agreed tier step-ups are booked only when the step becomes effective (treat as Upsell (ramp)).
Mixed amendments (split once): Allocate the price change by driver— tier move = Upsell; extra seats/minimum/price-only = Add-on; new module/product = Cross-sell.
Usage-based plans: Count contracted tier upgrades (higher committed level). Ignore uncommitted overage (that’s revenue, not ARR).
One-time items: Ignore prorations, credits, onboarding/implementation fees.
Reversals: If the upgrade is undone in the same period, net to $0; if undone later, record the drop as Down-sell.
Formula
Practical considerations:
When to record: On the effective (go-live) date of the tier/plan upgrade. Anything signed for later stays in CARR until it starts.
What counts as upsell: Move to a higher plan/tier (more features/capabilities).
How to measure:
Monthly plans → MRR delta × 12 at the snapshot.
Annual plans → New committed annual price − prior committed annual price (for the tier move).
Ramps: Pre-agreed tier step-ups are booked only when the step becomes effective (treat as Upsell (ramp)).
Mixed amendments (split once): Allocate the price change by driver— tier move = Upsell; extra seats/minimum/price-only = Add-on; new module/product = Cross-sell.
Usage-based plans: Count contracted tier upgrades (higher committed level). Ignore uncommitted overage (that’s revenue, not ARR).
One-time items: Ignore prorations, credits, onboarding/implementation fees.
Reversals: If the upgrade is undone in the same period, net to $0; if undone later, record the drop as Down-sell.
Formula
Practical considerations:
When to record: On the effective (go-live) date of the tier/plan upgrade. Anything signed for later stays in CARR until it starts.
What counts as upsell: Move to a higher plan/tier (more features/capabilities).
How to measure:
Monthly plans → MRR delta × 12 at the snapshot.
Annual plans → New committed annual price − prior committed annual price (for the tier move).
Ramps: Pre-agreed tier step-ups are booked only when the step becomes effective (treat as Upsell (ramp)).
Mixed amendments (split once): Allocate the price change by driver— tier move = Upsell; extra seats/minimum/price-only = Add-on; new module/product = Cross-sell.
Usage-based plans: Count contracted tier upgrades (higher committed level). Ignore uncommitted overage (that’s revenue, not ARR).
One-time items: Ignore prorations, credits, onboarding/implementation fees.
Reversals: If the upgrade is undone in the same period, net to $0; if undone later, record the drop as Down-sell.
Worked Example
Starting ARR (Feb 28): $1,200,000
Period: March (snapshot Mar 31)
Account | Event | Effective by Mar 31? | Account ARR @ Mar-31 ($) | Δ ARR in March ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | New logo, annual $24,000, starts Mar 4 | Yes | $24,000 | +$24,000 | New Logo | Not Upsell |
B | New logo, annual $36,000, starts Apr 1 | No | $0 | $0 | Booking / CARR | Signed, starts next month |
C | Upgrade: Standard $50,000 → Enterprise $68,000 (Mar 15) | Yes | $68,000 ($50,000 → $68,000) | +$18,000 | Expansion — Upsell | Counts in Upsell (Expansion) - Tier/plan upgrade |
D | Cancellation effective Mar 31 (prior $40,000) | Yes | $0 | −$40,000 | Logo Churn | Account to $0 |
E | Pre-agreed tier step-up (ramp) $20,000 → $35,000 on Mar 1 | Yes | $35,000 | +$15,000 | Expansion — Upsell (ramp) | Counts in Upsell (Expansion) —Higher edition starts this month |
Upsell ARR (March): $33,000 = $18,000 (C) + $15,000 (E)
ARR Bridge (March):
New Logo ARR: +$24,000 (A)
Upsell ARR (part of Expansion): +$33,000 (C + E)
Contraction ARR: $0
Logo Churn ARR: −$40,000 (D)
Net New ARR: $24,000 + $33,000 − $40,000 = +$17,000
Ending ARR (Mar 31): $1,200,000 + $17,000 = $1,217,000
Notes:
Only C and E count as Upsell (higher tier of the same product).
A is New Logo; B sits in CARR until April; D is Logo Churn.
Ramps count as Upsell only when they move to a higher tier and the step becomes effective; price-only or quantity-only ramps are Add-on, not Upsell.
Worked Example
Starting ARR (Feb 28): $1,200,000
Period: March (snapshot Mar 31)
Account | Event | Effective by Mar 31? | Account ARR @ Mar-31 ($) | Δ ARR in March ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | New logo, annual $24,000, starts Mar 4 | Yes | $24,000 | +$24,000 | New Logo | Not Upsell |
B | New logo, annual $36,000, starts Apr 1 | No | $0 | $0 | Booking / CARR | Signed, starts next month |
C | Upgrade: Standard $50,000 → Enterprise $68,000 (Mar 15) | Yes | $68,000 ($50,000 → $68,000) | +$18,000 | Expansion — Upsell | Counts in Upsell (Expansion) - Tier/plan upgrade |
D | Cancellation effective Mar 31 (prior $40,000) | Yes | $0 | −$40,000 | Logo Churn | Account to $0 |
E | Pre-agreed tier step-up (ramp) $20,000 → $35,000 on Mar 1 | Yes | $35,000 | +$15,000 | Expansion — Upsell (ramp) | Counts in Upsell (Expansion) —Higher edition starts this month |
Upsell ARR (March): $33,000 = $18,000 (C) + $15,000 (E)
ARR Bridge (March):
New Logo ARR: +$24,000 (A)
Upsell ARR (part of Expansion): +$33,000 (C + E)
Contraction ARR: $0
Logo Churn ARR: −$40,000 (D)
Net New ARR: $24,000 + $33,000 − $40,000 = +$17,000
Ending ARR (Mar 31): $1,200,000 + $17,000 = $1,217,000
Notes:
Only C and E count as Upsell (higher tier of the same product).
A is New Logo; B sits in CARR until April; D is Logo Churn.
Ramps count as Upsell only when they move to a higher tier and the step becomes effective; price-only or quantity-only ramps are Add-on, not Upsell.
Worked Example
Starting ARR (Feb 28): $1,200,000
Period: March (snapshot Mar 31)
Account | Event | Effective by Mar 31? | Account ARR @ Mar-31 ($) | Δ ARR in March ($) | Category | Notes |
|---|---|---|---|---|---|---|
A | New logo, annual $24,000, starts Mar 4 | Yes | $24,000 | +$24,000 | New Logo | Not Upsell |
B | New logo, annual $36,000, starts Apr 1 | No | $0 | $0 | Booking / CARR | Signed, starts next month |
C | Upgrade: Standard $50,000 → Enterprise $68,000 (Mar 15) | Yes | $68,000 ($50,000 → $68,000) | +$18,000 | Expansion — Upsell | Counts in Upsell (Expansion) - Tier/plan upgrade |
D | Cancellation effective Mar 31 (prior $40,000) | Yes | $0 | −$40,000 | Logo Churn | Account to $0 |
E | Pre-agreed tier step-up (ramp) $20,000 → $35,000 on Mar 1 | Yes | $35,000 | +$15,000 | Expansion — Upsell (ramp) | Counts in Upsell (Expansion) —Higher edition starts this month |
Upsell ARR (March): $33,000 = $18,000 (C) + $15,000 (E)
ARR Bridge (March):
New Logo ARR: +$24,000 (A)
Upsell ARR (part of Expansion): +$33,000 (C + E)
Contraction ARR: $0
Logo Churn ARR: −$40,000 (D)
Net New ARR: $24,000 + $33,000 − $40,000 = +$17,000
Ending ARR (Mar 31): $1,200,000 + $17,000 = $1,217,000
Notes:
Only C and E count as Upsell (higher tier of the same product).
A is New Logo; B sits in CARR until April; D is Logo Churn.
Ramps count as Upsell only when they move to a higher tier and the step becomes effective; price-only or quantity-only ramps are Add-on, not Upsell.
Best Practices
Show it separately: Report Upsell apart from Cross-sell and Add-on so the driver is clear.
Count when live: Use the effective (go-live) date; keep signed-for-later upsells in CARR until they start.
Find upsell signals: Flag accounts hitting plan limits, requesting locked features, showing strong usage/NPS, or approaching renewal.
Make upgrades easy: Clear tier ladders, in-app upgrade prompts, fast quoting/order forms, and simple approvals.
Protect pricing: Use time-boxed promos; tie price to new value unlocked; avoid permanent discount creep.
Check adoption after upsell: Do 30/60-day “is it being used?” checks; intervene early if usage is low.
Forecast cleanly: Keep a separate upsell pipeline with expected start dates; reconcile to the ARR bridge every period.
QA the change type: Split mixed amendments correctly—tier change = Upsell, more seats/minimum/price = Add-on, new product/module = Cross-sell.
Best Practices
Show it separately: Report Upsell apart from Cross-sell and Add-on so the driver is clear.
Count when live: Use the effective (go-live) date; keep signed-for-later upsells in CARR until they start.
Find upsell signals: Flag accounts hitting plan limits, requesting locked features, showing strong usage/NPS, or approaching renewal.
Make upgrades easy: Clear tier ladders, in-app upgrade prompts, fast quoting/order forms, and simple approvals.
Protect pricing: Use time-boxed promos; tie price to new value unlocked; avoid permanent discount creep.
Check adoption after upsell: Do 30/60-day “is it being used?” checks; intervene early if usage is low.
Forecast cleanly: Keep a separate upsell pipeline with expected start dates; reconcile to the ARR bridge every period.
QA the change type: Split mixed amendments correctly—tier change = Upsell, more seats/minimum/price = Add-on, new product/module = Cross-sell.
Best Practices
Show it separately: Report Upsell apart from Cross-sell and Add-on so the driver is clear.
Count when live: Use the effective (go-live) date; keep signed-for-later upsells in CARR until they start.
Find upsell signals: Flag accounts hitting plan limits, requesting locked features, showing strong usage/NPS, or approaching renewal.
Make upgrades easy: Clear tier ladders, in-app upgrade prompts, fast quoting/order forms, and simple approvals.
Protect pricing: Use time-boxed promos; tie price to new value unlocked; avoid permanent discount creep.
Check adoption after upsell: Do 30/60-day “is it being used?” checks; intervene early if usage is low.
Forecast cleanly: Keep a separate upsell pipeline with expected start dates; reconcile to the ARR bridge every period.
QA the change type: Split mixed amendments correctly—tier change = Upsell, more seats/minimum/price = Add-on, new product/module = Cross-sell.
FAQs
What counts as Upsell ARR?
Moving an existing customer to a higher tier/plan of the same product (unlocking more features/limits). Count only the incremental recurring amount.Upsell vs Cross-sell vs Add-on — what’s the difference?
Upsell: Same product, higher tier/plan (more features/limits).
Cross-sell: New, distinct paid product/module added.
Add-on: Same product/tier, more seats/units/higher minimum or a price-only increase.
Do price-only increases count as Upsell?
No. A pure price bump (same product & tier) is Add-on (price), not Upsell.When do we record an upsell?
On the effective (go-live) date. If it’s signed for a future start, it sits in CARR until it begins.Can Upsell ARR be negative?
No. If a customer steps down a tier/plan, that’s Down-sell (Contraction). If they cut seats/minimum or get a price cut, that’s Reduction (Contraction)—not negative Upsell.What about pre-agreed step-ups (ramps)?
Record the increase on the day the step goes live and label it Upsell (ramp).
FAQs
What counts as Upsell ARR?
Moving an existing customer to a higher tier/plan of the same product (unlocking more features/limits). Count only the incremental recurring amount.Upsell vs Cross-sell vs Add-on — what’s the difference?
Upsell: Same product, higher tier/plan (more features/limits).
Cross-sell: New, distinct paid product/module added.
Add-on: Same product/tier, more seats/units/higher minimum or a price-only increase.
Do price-only increases count as Upsell?
No. A pure price bump (same product & tier) is Add-on (price), not Upsell.When do we record an upsell?
On the effective (go-live) date. If it’s signed for a future start, it sits in CARR until it begins.Can Upsell ARR be negative?
No. If a customer steps down a tier/plan, that’s Down-sell (Contraction). If they cut seats/minimum or get a price cut, that’s Reduction (Contraction)—not negative Upsell.What about pre-agreed step-ups (ramps)?
Record the increase on the day the step goes live and label it Upsell (ramp).
FAQs
What counts as Upsell ARR?
Moving an existing customer to a higher tier/plan of the same product (unlocking more features/limits). Count only the incremental recurring amount.Upsell vs Cross-sell vs Add-on — what’s the difference?
Upsell: Same product, higher tier/plan (more features/limits).
Cross-sell: New, distinct paid product/module added.
Add-on: Same product/tier, more seats/units/higher minimum or a price-only increase.
Do price-only increases count as Upsell?
No. A pure price bump (same product & tier) is Add-on (price), not Upsell.When do we record an upsell?
On the effective (go-live) date. If it’s signed for a future start, it sits in CARR until it begins.Can Upsell ARR be negative?
No. If a customer steps down a tier/plan, that’s Down-sell (Contraction). If they cut seats/minimum or get a price cut, that’s Reduction (Contraction)—not negative Upsell.What about pre-agreed step-ups (ramps)?
Record the increase on the day the step goes live and label it Upsell (ramp).
Related Metrics
Commonly mistaken for:
Cross-sell ARR (ARR from adding a distinct product/module)
Add-on ARR (ARR from more seats/units or price-only increase)
New Logo ARR (ARR from new customers, not existing ones)
Related Metrics
Commonly mistaken for:
Cross-sell ARR (ARR from adding a distinct product/module)
Add-on ARR (ARR from more seats/units or price-only increase)
New Logo ARR (ARR from new customers, not existing ones)
Related Metrics
Commonly mistaken for:
Cross-sell ARR (ARR from adding a distinct product/module)
Add-on ARR (ARR from more seats/units or price-only increase)
New Logo ARR (ARR from new customers, not existing ones)
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