Net revenue retention
What is Net Revenue Retention (NRR)?
Net revenue retention (NRR), also known as net dollar retention, is a metric that measures the percentage of recurring revenue a business retains from its existing customers over a specific period, typically monthly or annually. Unlike basic retention metrics, NRR also includes expansion revenue, such as upgrades, upsells, and cross-sells. These can significantly increase revenue without acquiring new customers, making NRR a powerful indicator of customer satisfaction, product value and long-term growth potential.
To calculate NRR:
NRR = (Recurring Revenue at End of Period ÷ Recurring Revenue at Start of Period) × 100
Make sure to include expansion revenue and subtract any churned or downgraded revenue.
How does NRR compare to other retention metrics?
While NRR focuses on how much revenue existing customers continue to generate, it differs from other related metrics:
Each of these plays a different role in understanding the health of your customer relationships. High NRR often signals strong product-market fit, high customer satisfaction, and effective account expansion strategies.
Why is NRR important for subscription-based businesses?
For SaaS companies, curated subscription boxes, and any brand built on recurring revenue, NRR is one of the most critical KPIs. It shows whether your existing customer base is becoming more valuable over time a key sign of healthy, scalable growth.
Tracking NRR helps businesses:
A high NRR (above 100%) means your expansion revenue is outpacing losses, while a figure below 100% may suggest the need for improvements in retention or product experience. Ultimately, NRR gives you a clear view of the real value of your existing customers, making it a must-watch metric for sustainable success.
