# Net Revenue Retention (NRR)

> Net revenue retention (NRR) measures the percentage of recurring revenue retained from existing customers over a period, including expansions, contractions, and churn.

- **URL**: https://dodopayments.com/glossary/net-revenue-retention-nrr

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**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 x 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) x 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.

## Learn More

- [Metrics to reduce SaaS churn](https://dodopayments.com/blogs/reduce-churn-metrics-saas)
- [Reducing involuntary churn from failed payments](https://dodopayments.com/blogs/involuntary-churn-failed-payments)
- [How subscription fatigue impacts retention](https://dodopayments.com/blogs/subscription-fatigue)