Net New Revenue is the total new revenue from a period after deducting lost revenue from churned customers and contractions. It measures a company's actual revenue growth and is often used as the basis for commission calculations, especially in SaaS and subscription businesses. According to Bessemer (2024), 67% of SaaS companies use net new revenue as the primary metric for sales performance.
Net new revenue provides a more accurate picture than gross totals:
According to OpenView (2024), companies that pay commission on net new revenue have 18% lower churn than those paying on gross sales.
Net New Revenue = New Revenue + Expansion - Contraction - Churn
| Component | Description | Amount |
|---|---|---|
| New revenue | From brand new customers | +$63,000 |
| Expansion | Upgrades from existing customers | +$21,000 |
| Contraction | Downgrades from existing customers | -$7,000 |
| Churn | Lost revenue from cancellations | -$14,000 |
| Net New Revenue | +$63,000 |
Commission can be calculated in different ways using net new revenue:
| Component | Revenue | Rate | Commission |
|---|---|---|---|
| New revenue | $63,000 | 12% | $7,560 |
| Expansion | $21,000 | 8% | $1,680 |
| Total commission | $9,240 |
| Aspect | Net New Revenue | Gross New Revenue |
|---|---|---|
| Definition | New minus lost revenue | All new revenue |
| Includes churn | Yes (subtracted) | No |
| Shows | Real growth | Sales activity |
| Best for | Business health | Rep performance |
Net new revenue-based commission works best for:
For pure hunters (new customers only), gross new revenue is often more appropriate.
Many companies hold reps accountable for churn in the first 3-12 months after the sale, since deal quality affects retention. See also clawback.
Most plans set a floor at $0 commission - reps aren't penalized beyond losing earnings.
MRR is a point-in-time measurement of recurring revenue. Net new MRR is the change in MRR over a period - essentially net new revenue for subscription businesses.
Net new revenue requires precise tracking of new customers, expansions, and churn. With Prowi, you can automatically calculate net new revenue, apply different commission rates per component, and give reps visibility into all factors affecting their commission.