It takes into account the MRR gained from expansions and upgrades from your remaining customers. It gives you a clear indication of how much increase or decrease in revenue can be expected from your existing customers.
The difference between Net MRR Churn Rate and Gross MRR Churn Rate is that the latter doesn’t take into account expansion revenue from the existing customer base.
Net MRR Churn Rate = [(Contraction MRR - Expansion MRR during a period) / (MRR at the beginning of the period)]*100.
Net MRR Churn rate is the true indicator of how your business is faring. It tells you whether your business is sustainable or not. A net negative churn rate is great, indicating growth contributed by the existing subscription base. If this number is positive it means your business revenue contribution from existing customers, is shrinking faster than it is expanding.