Net Revenue Retention (NRR)

Net Revenue Retention (NRR), also called Net Dollar Retention (NDR), measures how much revenue you keep and grow from your existing customer base, independent of new customer acquisition. The formula is: NRR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR x 100%.

An NRR above 100% is the gold standard for subscription businesses. It means that even if the company stopped acquiring new customers entirely, revenue from existing customers would still grow. For example, if a cohort of customers started with $100,000 in MRR, expanded by $15,000, contracted by $5,000, and churned $8,000, the NRR would be ($100,000 + $15,000 - $5,000 - $8,000) / $100,000 = 102%. Top-performing SaaS companies achieve NRR of 110-130%+.

NRR is arguably the single most important metric for subscription businesses because it reflects the combined health of the product (do customers expand usage?), pricing (do they upgrade to higher tiers?), customer success (do they stay?), and billing infrastructure (are payments collected reliably?). Investors weight NRR heavily in valuation models.

A helpful way to decompose NRR is to separate gross revenue retention (GRR) from expansion. GRR measures retention without expansion — it can never exceed 100%. If GRR is 92%, the business retains 92% of starting revenue before any upsell. A high NRR driven primarily by expansion with a low GRR can be fragile because it depends on continuous expansion to mask underlying churn.

Involuntary churn from failed payments directly reduces NRR. If your gross revenue retention is 94% and 3 percentage points of that loss comes from unrecovered payment failures, improving recovery could bring GRR to 97% — a meaningful improvement. LostChurn helps maximize NRR by ensuring that payment failures do not drag down your retention metrics.