What it is: Dollar-Based Net Expansion Rate (DBNER) is a metric used to measure the revenue growth generated from existing customers through add-ons, upselling, and cross-selling. It calculates the change in revenue from a specific cohort of customers over a given period, reflecting the expansion or contraction of customer spend.
Why it is important: DBNER is important for SaaS and subscription-based businesses to assess their ability to drive additional revenue from existing customers. It indicates the company's ability to upsell, cross-sell, and retain customers, providing insights into the long-term revenue potential and customer satisfaction.
Formulas: DBNER is calculated by dividing the current period revenue from existing customers (including upsells and expansions) by the prior period revenue from the same customer cohort. The result is expressed as a percentage.
How to use it in the context of startups: Startups can use DBNER to track the expansion or contraction of revenue from their existing customer base. By monitoring DBNER over time, startups can identify opportunities to increase customer lifetime value, improve customer success strategies, and refine pricing and product offerings.
