B2B SaaS case study · Synthetic data

Your premium SaaS tier is growing. Is the company?

A fictional B2B SaaS company reported $3M in Premium-tier ARR. Only $500K represented net incremental recurring revenue after plan migration, downgrades, and churn were reconciled.

Premium-tier ARR: $3M
Upgrade migration from Standard: $1.8M
Net incremental recurring revenue: $500K
Portfolio equation: $700K new-company+ $500K expansion− $300K downgrade− $400K churn

Premium ARR composition

New to the tier does not mean new to the company.

New-to-tier ARR$3M

All $3M was new to Premium. But $1.8M came from Standard-tier customers whose total recurring spend did not increase. Only $700K was new-to-company ARR, while $500K was expansion from existing customers.

New-to-company$700K23% of Premium ARR

Expansion revenue$500K17% of Premium ARR

Upgrade migration$1.8M60% of Premium ARR

$3M in Premium-tier ARR comprises $700K new-to-company ARR, $500K expansion revenue, and $1.8M of upgrade migration from Standard.

New-to-company

Premium ARR from customers with no prior company subscription.

Expansion revenue

The increase in total recurring spend from existing company customers.

Upgrade migration

ARR moved from Standard to Premium without increasing the customer's total recurring spend.

Portfolio ARR bridge

From tier performance to company impact.

Upgrade migration changes where ARR is reported. Net incremental recurring revenue measures whether total company ARR increased after gains and losses are reconciled.

New-company ARR plus expansion produced $1.2M of gross incremental ARR. After $300K of downgrades and $400K of churn elsewhere, net incremental recurring revenue was $500K. Upgrade migration had zero portfolio impact.

New-to-company+$700K

Expansion revenue+$500K

Upgrade migration$0$1.8M moved tiers

Downgrade−$300K

Churn−$400K

Net incremental recurring revenue$500K

Gross incremental ARR$1.2MNew-company + expansion

Portfolio losses$700KDowngrade + churn

Net incremental recurring revenue$500K

Movement definitions

Seven labels. Seven different questions.

New-to-tier: ARR appearing in Premium for the first time, regardless of the customer’s prior company relationship.
New-to-company: ARR from customers with no prior company subscription.
Upgrade migration: ARR transferred from Standard to Premium without a rise in total customer spend.
Expansion revenue: An increase in an existing customer’s total recurring spend.
Downgrade: Recurring revenue lost when a customer moves to a lower-priced plan.
Churn: Recurring revenue lost when a customer ends the company subscription.
Net incremental recurring revenue: New-company ARR plus expansion, less downgrades and churn across the company portfolio.

Methodology

Reconcile customers across tiers and periods.

Establish pre-launch ARR.Map each account’s recurring spend across Standard and other tiers.
Measure Premium ARR.Identify first-year recurring revenue in the new tier.
Reconcile account totals.Separate changes in total spend from changes in tier allocation.
Reconcile portfolio losses.Include downgrades and churn outside Premium before calculating net impact.

Limitation: This example uses synthetic data. Observed upgrades, downgrades, and churn are descriptive. They do not establish that the Premium launch caused those movements without an appropriate comparison design and controls for timing, customer mix, pricing, and underlying trends.

Tier growth, reconciled

Is the tier growing—or is the company?

A 20-minute data-fit conversation can determine whether your subscription history supports an Incremental Growth Audit.

Request a 20-minute data-fit conversation