SaaS Metrics

Net Revenue Retention (NRR)

Definition

Net revenue retention (NRR), also called net dollar retention (NDR), measures the percentage of recurring revenue retained from existing customers over a period, including expansions, contractions, and churn. An NRR above 100 % means a company grows even without acquiring new customers.

Formula

NRR = ((Beginning MRR + Expansion MRR − Contraction MRR − Churned MRR) ÷ Beginning MRR) × 100

Overview

Net revenue retention (NRR) is widely considered the single best indicator of product-market fit in a subscription business. It answers a simple question: if you stopped acquiring new customers today, would your revenue grow or shrink?

The calculation starts with your beginning-period MRR from a specific cohort, adds expansion and reactivation revenue, then subtracts contraction and churned revenue. The result is divided by the beginning MRR. A figure above 100 % means existing customers are spending more over time, which dramatically reduces reliance on new-logo acquisition for growth.

Best-in-class SaaS companies report NRR between 120 to 140 %. At the seed and Series A stages, hitting 100 to 110 % is a strong signal. Consistently declining NRR, even if still above 100 %, can indicate pricing pressure or saturation within your customer base.

Example

A cohort starts the quarter with $100K MRR, adds $15K in upsells, loses $3K to downgrades, and $7K to cancellations. NRR = (($100K + $15K − $3K − $7K) ÷ $100K) × 100 = 105 %.

SaaS Churn Rate: 3.5% Median in 2026 (By Stage)MRR vs ARR Explained: Formulas and Stage Guide