Net revenue retention (NRR)

What is net revenue retention (NRR)?

Net Revenue Retention (NRR), also known as Net Dollar Retention (NDR), is a key performance metric that shows how much recurring revenue a business retains from its existing customers over a specific period. It factors in upgrades (expansions), downgrades (contractions), and churn (cancellations), making it a strong indicator of customer success and account growth. NRR originated as a SaaS metric but applies equally well to subscription ecommerce and DTC subscription programs, where existing subscribers can upgrade box sizes, add products, downgrade, or cancel.

NRR is expressed as a percentage of starting monthly recurring revenue (MRR). A value above 100% means your current customer base is generating more revenue than before, without adding new customers. A lower value may signal a need to improve retention, reduce churn, or re-engage customers who are downgrading their plans.

How to calculate net revenue retention

Use this formula:

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

For example, if your starting monthly recurring revenue (MRR) is $50,000, and after churn, downgrades, and expansions you end at $55,000, your NRR is 110%.

NRR vs. Gross Revenue Retention (GRR)

• NRR includes expansions (upsells and cross-sells), making it a growth indicator.
• GRR does not include expansions. It’s a pure retention metric.
• A company can have a high NRR even with some churn if upsells and expansions outweigh the losses.

Net revenue retention benchmarks

• SaaS average: 90%–120%
• Best-in-class: >120%
• Below 100% suggests contraction and higher churn.

What is a good net revenue retention rate?

An NRR above 100% is a positive sign. It means strong customer retention is being amplified by expansion revenue, so the existing customer base is growing on its own without new acquisition. Sustained NRR above 100% is also one of the clearest signals of product-market fit in any subscription business.

Why does NRR matter?

NRR helps evaluate customer satisfaction, upselling effectiveness, and long-term growth potential. It’s a core metric for SaaS and subscription-based businesses. Because the formula nets expansion against churn and downgrades, churn rate is typically the biggest single force pulling NRR below 100%, which is why teams that improve churn often see NRR move first, before acquisition metrics do.

Example of net revenue retention

Let’s say your SaaS company starts the month with $100,000 in revenue from existing customers. During the month, you upsell $10,000, lose $5,000 to churn, and downgrade $2,000. Your NRR would be:

(($100,000 – $5,000 – $2,000 + $10,000) ÷ $100,000) × 100 = 103%

This means you grew revenue from existing customers, even before acquiring new ones.

Driftcharge Tip

A Net Revenue Retention rate above 100% signals healthy expansion and strong customer satisfaction. Focus on upsell and cross-sell strategies while minimizing churn to boost your NRR.

Ganesh Pawar

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Ganesh Pawar is the founder of Driftcharge, a subscription management app designed to help Shopify merchants streamline and scale their subscription businesses. With a deep focus on solving real-world pain points—like legacy account page support, flexible subscription options, and advanced analytics—Ganesh is passionate about building tools that drive growth and retention.