Net Revenue Retention (NRR)

Net Revenue Retention (NRR), also known as Net Dollar Retention (NDR), measures how much recurring revenue a business retains and grows from its existing customer base over a defined period, typically calculated monthly or annually. It captures the full picture of customer revenue dynamics by incorporating expansion revenue (upgrades, cross-sells, add-ons), contraction revenue (downgrades), and churned revenue (cancellations) in a single metric.

The formula for NRR is: (Beginning MRR + Expansion MRR - Contraction MRR - Churned MRR) / Beginning MRR × 100. For example, if a business starts the month with $100,000 MRR, gains $15,000 from expansions, loses $3,000 to downgrades, and loses $5,000 to cancellations, its NRR is ($100,000 + $15,000 - $3,000 - $5,000) / $100,000 = 107%. This means the existing customer base grew by 7% without any new customer acquisition.

NRR benchmarks vary by business model, but generally an NRR above 100% is considered healthy (existing customers are growing in value), above 110% is strong, and above 120% is elite—typically seen in the best SaaS and subscription companies. An NRR below 100% means the business is leaking revenue from its existing base and must acquire new customers just to maintain current revenue levels. NRR is one of the most closely watched metrics by investors and operators alike because it indicates the fundamental quality of the customer relationship and the compounding growth potential of the business.