How the model works
Each month, existing revenue shrinks by the churn rate and grows by the expansion rate, while new and reactivated customers join at your average revenue per user. Net revenue retention (NRR) captures both effects in one number: (1 − churn) × (1 + expansion). When NRR is below 100%, a fixed stream of new customers eventually settles into a steady-state MRR, because inflow exactly offsets the revenue lost each month. When NRR is 100% or higher, expansion outruns churn on its own and MRR keeps compounding with no ceiling, even without adding a single new customer.
How to read the results
Customer lifetime is simply 1 divided by the monthly churn rate: at 3% monthly churn, a customer sticks around about 33 months on average. Lifetime value multiplies your ARPU and gross margin by that same retention math, so it rises when churn falls or expansion picks up. The chart's dashed ceiling line only appears when the projection is close enough to actually reach it within the horizon you're viewing; far-off ceilings are omitted so the curve isn't flattened into a straight line.
Caveats worth knowing
This is a cohort-level average, not a forecast for any individual customer, and it assumes churn, expansion, and new-customer volume all stay constant across the horizon, which real businesses rarely do exactly. Seasonality, pricing changes, and one-time enterprise deals will all move the actual numbers around this baseline. Use it to compare scenarios and sanity-check targets, not as a guaranteed revenue plan.