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Net Revenue Retention (NRR) 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 is expressed as a percentage. 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.
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%.
A company can have a high NRR even with some churn if the upsells outweigh the losses.
An NRR above 100% is a positive sign. The higher it is, the more your business is growing from its current customer base without new acquisition.
NRR helps evaluate customer satisfaction, upselling effectiveness, and long-term growth potential. It’s a core metric for SaaS and subscription-based businesses.
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.
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.
