Complete Definition
Net Revenue Retention (NRR), also called Net Dollar Retention (NDR), measures the percentage of recurring revenue retained from existing customers over a period, accounting for upgrades, downgrades, and churn.
How to Calculate NRR
NRR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100%
NRR Components
- **Starting MRR**: Revenue at period start - **Expansion MRR**: Upgrades, add-ons, price increases - **Contraction MRR**: Downgrades - **Churned MRR**: Cancelled revenue
NRR Benchmarks
- **Excellent**: > 130% (growing without new sales) - **Good**: 100-130% - **Concerning**: 80-100% - **Poor**: < 80%
Why NRR Matters
- Shows true customer value over time - NRR > 100% means growth from existing base alone - Heavily impacts valuation (high NRR = higher multiples) - Indicates product-market fit strength - Key metric for SaaS investors
Improving NRR
- Build expansion paths into product - Identify upsell triggers - Reduce churn through success teams - Usage-based pricing for natural expansion - Land-and-expand strategy