Net Revenue Retention (NRR)
What is NRR?
NRR is net revenue retention, the percentage of recurring revenue retained from existing customers over a period, including expansion, downgrades, and churn. NRR above 100% means expansion outpaces losses.
Net revenue retention follows a starting group of customers and asks how their recurring revenue changed. It captures the combined effect of expansion, downgrades, and cancellations. New customer sales belong outside the numerator, because including them would turn retention into a growth metric for the whole company.
Also known as: NDR, Net Dollar Retention, Net Revenue Retention, Net Revenue Retention %
Formula
Net Revenue Retention % = (Starting MRR + Existing Customer Upgrades - Existing Customer Downgrades - Existing Customer Churn) / Starting MRR | Variable | Meaning |
|---|---|
Starting MRR | Monthly recurring revenue at the start of the period. |
Existing Customer Upgrades | Expansion revenue from existing customers. |
Existing Customer Downgrades | Contraction revenue from existing customers. |
Existing Customer Churn | Recurring revenue lost from existing customers. |
How to use it
- Choose a starting date and freeze the list of existing paying accounts. Record their opening recurring revenue.
- Measure expansion, contraction, and churn for those same accounts during the reporting window. Exclude reactivated customers and their revenue; track reactivation MRR separately. Document currency and price changes.
- Add expansion to opening revenue, subtract contraction and churn, then divide by opening revenue. Reconcile these movements to the subscription ledger without adding reactivation MRR to the NRR cohort.
Worked example
Hypothetical worked scenario
A fictional cohort begins with $100,000 MRR. During the period it adds $15,000 in upgrades, loses $5,000 to downgrades, and loses $3,000 to cancellations. New customers add another $20,000.
NRR = ($100,000 + $15,000 − $5,000 − $3,000) ÷ $100,000 = 107%. New-customer MRR is excluded.
The opening cohort expanded by $7,000 MRR. The whole company grew more because of new customers, but that extra growth does not improve this cohort’s retention rate.
Calculate with your numbers
Net Revenue Retention % = (Starting MRR + Existing Customer Upgrades - Existing Customer Downgrades - Existing Customer Churn) / Starting MRR | Variable | Meaning |
|---|---|
Starting MRR | Monthly recurring revenue at the start of the period. |
Existing Customer Upgrades | Expansion revenue from existing customers. |
Existing Customer Downgrades | Contraction revenue from existing customers. |
Existing Customer Churn | Recurring revenue lost from existing customers. |
Worked example
- Starting MRR
- $100,000
- Upgrades (expansion MRR)
- $15,000
- Downgrades (contraction MRR)
- $5,000
- Churned MRR
- $3,000
- → Net Revenue Retention
- 107%
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Open the NRR calculator for a focused view of the inputs.
What the result tells you
Read NRR with GRR and account retention. A cohort can produce more revenue while serving fewer customers, especially after price rises. Break the increase into product adoption, seat growth, and pricing before concluding that customer health improved; report reactivation MRR separately.
Assumptions and common mistakes
- This calculator models expansion, contraction, and churn from the opening cohort. Do not enter reactivated-customer revenue as expansion or retained revenue; report it separately as reactivation MRR in the company-wide revenue bridge.
- A monthly 107% result cannot be compared directly with an annual 107% result.
- Currency translation or acquired customer books can change reported revenue without reflecting product retention. Isolate these effects when material.
Check how your team defines NRR against these rules.
See a worked MRR reconciliation, from opening to closing MRR, with a downloadable ledger.
Compare related measures
Frequently asked questions
Does NRR above 100% mean the company is growing?
It means the starting cohort expanded under the stated measurement rules. Total company growth also depends on new sales and the size and timing of other cohorts.
Should I use MRR or ARR?
Either can work if every component uses the same basis and the same customer cohort. The calculator uses MRR labels to make the inputs consistent.
Sources and methodology
The references below explain the underlying methods. Our worked scenarios use hypothetical figures; they are not company results or current market benchmarks.
- ChartMogul: Net MRR Retention cohort
Following recurring revenue from the same customer cohort.
- ChartMogul: Gross MRR Retention report
Retention excluding expansion and reactivation.
Found an error or a definition that differs from your reporting? Send a correction with the page URL and the method you use.