What is Net Revenue Retention (NRR)?

NRR measures the percentage of recurring revenue you keep from existing customers over a set period, after accounting for upgrades, downgrades, and cancellations.

It captures true revenue health by including both expansion (upsells, add-ons, price increases) and contraction (churn, downgrades). An NRR above 100% indicates upsells more than offset losses, a strong indicator of healthy subscription business growth.

Formula

NRR (%) = (Starting MRR + Expansion Revenue – Churned Revenue) ÷ Starting MRR × 100

Example

Starting MRR: $2,000,000

Expansion (upsells, price hikes): +$ 200,000

Churn/Downgrades: –$75,000

NRR = (($2,000,000 + $200,000 – $75,000) ÷ $2,000,000) × 100 = 106.25%

Key Benchmarks

≥100%: Your base revenue is stable or growing—ideal for mature SaaS.

≈125%: “Sweet spot” indicating frequent upgrades without overreliance on one-time boosts.

<100%: Signals contraction; common in younger companies but worth addressing through retention efforts.

Why it’s Important

Revenue Stability: Focuses on predictable income from existing customers rather than one-time sales.

Investor Confidence: A consistent or growing NRR signals strong customer satisfaction and a solid value proposition.

True Health Check: Tracks revenue changes, not just customer counts—downgrades or upsells directly impact the metric.