Net revenue retention (NRR), also called net dollar retention, is the recurring revenue you keep from an existing group of customers over a period, usually 12 months, after adding upgrades and subtracting downgrades and cancellations. New customers are excluded. Above 100% means existing customers are spending more than you lose. The 2025 SaaS Capital survey put the private B2B SaaS median at 101%.
Key takeaways
- NRR = (starting MRR + expansion − contraction − churn) ÷ starting MRR, measured on the same customers.
- Over 100% means your existing customers grow revenue on their own, even with zero new sales.
- Median private B2B SaaS NRR was 101% in SaaS Capital's 2025 survey; consumer and AI-native products sit far lower.
- Count only the extra revenue from an upgrade, never the full new price.
- Always read NRR next to gross revenue retention, or a few big upgrades can hide a churn problem.
In 2020, two software companies went public and investors went wild.
JFrog reported 46 percent revenue growth. Snowflake reported 121 percent and reached a $92 billion valuation.
But the number I couldn't stop looking at wasn't growth. It was net dollar retention. JFrog's was 139 percent. Snowflake's was 158 percent.
In Chapter 4 of The Subscription Playbook I called this "the miracle of net dollar retention." Here's why it's a miracle. A company with 158 percent net retention would earn 58 percent more from last year's customers even if the sales team took the whole year off.
(I don't recommend testing that.)
What is net revenue retention?
Net revenue retention (NRR), also called net dollar retention (NDR), measures how much recurring revenue you keep from a fixed group of existing customers over a period, usually 12 months.
You start with what those customers paid you at the beginning. You add what they spent on upgrades, extra seats, add-ons and price rises. You subtract downgrades and cancellations. New customers are left out completely.
If the answer is above 100 percent, your existing customers are a growth engine. Below 100 percent, they're a leaky bucket and new sales have to refill it before you grow at all.
NRR = (Starting MRR + Expansion MRR − Contraction MRR − Churned MRR) ÷ Starting MRR × 100
There's also a cohort version that gives the same answer and is harder to fudge:
NRR = MRR today from customers you had 12 months ago ÷ MRR from those same customers 12 months ago × 100
SaaS Capital uses exactly this: December MRR from customers who were already customers the previous December, divided by total MRR that previous December.
How do you calculate NRR? A worked example
A $20,000 MRR subscription business over 12 months
You start the year with 1,000 customers paying $20 a month. Starting MRR is $20,000.
- 30 customers upgrade to a $50 plan. Expansion is 30 × $30 = $900 (only the extra $30 counts).
- 40 customers downgrade to a $10 plan. Contraction is 40 × $10 = $400.
- 60 customers cancel. Churned MRR is 60 × $20 = $1,200.
NRR = ($20,000 + $900 − $400 − $1,200) ÷ $20,000 = 96.5%
Gross revenue retention, which ignores the upgrades, is ($20,000 − $400 − $1,200) ÷ $20,000 = 92%.
So this business keeps 92 cents of every dollar and wins back 4.5 cents through upgrades. Respectable. But it still needs new customers just to stand still.
Run your own numbers through the NRR and GRR calculator, or start one step earlier and get your monthly recurring revenue right first.
NRR and GRR CalculatorNet and gross revenue retention.Open the free tool →Can net revenue retention be over 100 percent?
Yes, and that's the whole point.
NRR goes above 100 percent whenever expansion revenue is bigger than contraction plus churn. That's what I called net negative churn in Chapter 9, and it has its own page: how net negative churn works.
Gross revenue retention can't go above 100 percent, because it ignores upgrades. That's why you need both. I explain the difference in GRR vs NRR.
What is a good net revenue retention rate?
It depends heavily on who you sell to and how much they pay. Here are the most recent sourced figures. The full breakdown is on the NRR benchmarks page.
| Source and year | Who's in the data | Median NRR | Upper quartile |
|---|---|---|---|
| SaaS Capital, 2025 | 1,000+ private B2B SaaS companies over $1M ARR | 101% | 111% (ACV $25k–$50k band) |
| ChartMogul, 2025 data | ~2,700 B2B SaaS companies over $250k ARR | 82% | 97% |
| ChartMogul, 2025 data | B2C (consumer) SaaS | 49% | not reported |
| ChartMogul, 2025 data | AI-native products | 48% | not reported |
| Procore, FY2025 | One public company, usage-based pricing | 106% | n/a |
Why do the two big surveys disagree so much? SaaS Capital surveys established companies that report their own numbers. ChartMogul reads billing data directly and includes many smaller, self-serve businesses. Both are honest. They just describe different populations.
My rule of thumb: if you sell to businesses, aim for over 100 percent. If you sell to consumers, NRR below 100 percent is normal, and your job is to keep gross retention as high as you can.
Calculate your NRR and GRR in two minutes
Enter starting MRR, upgrades, downgrades and cancellations. The free calculator gives you net and gross retention side by side.
Five mistakes that make NRR look better (or worse) than it is
- Letting new customers in. NRR only counts customers who were there at the start. Mix in new sign-ups and you're measuring revenue growth instead.
- Counting the full upgraded price. A customer moving from $20 to $50 adds $30 of expansion, not $50.
- Including one-off fees or GST. Setup fees, hardware and tax aren't recurring revenue. In Australia, take GST out before you calculate (the ATO's GST guidance explains who collects it).
- Comparing monthly with annual. A monthly NRR of 101 percent compounds to about 112.7 percent a year. Compare like with like.
- Blending every segment. Ten big accounts expanding can hide hundreds of small ones leaving. Split NRR by plan or customer size.
How NRR connects to the book
NRR runs through three chapters.
In Chapter 4, high NRR is the reason usage-based pricing companies like Snowflake and JFrog won over investors. Revenue grows as the customer's usage grows.
In Chapter 7, NRR is how you prove land and expand is working. DocuSign landed with simple e-signatures and reported 125 percent net dollar retention in 2021.
In Chapter 9, NRR above 100 percent is the goal: net negative churn. One honest correction while we're here. The quick formula in Chapter 9 is labeled net dollar retention, but it actually gives you net revenue churn, the mirror image. NRR is simply 100 percent minus net revenue churn. I walk through the fix on the negative churn page.
The book's stories have aged in interesting ways. Procore, my Chapter 4 example, reported NRR of 106 percent and gross retention of 95 percent for 2025, down from the boom years as construction slowed. Solid, not spectacular. I cover what changed in the Procore case study.
Does NRR matter for a gym or a cafe?
Absolutely, even if you never call it NRR.
Say your cafe runs a coffee club: 120 members at $35 a month, so $4,200 of MRR. Over a year, 15 members move to a $55 "coffee and pastry" tier (+$300) and 10 members cancel (−$350). Your NRR is ($4,200 + $300 − $350) ÷ $4,200 = 98.8 percent. (These figures are illustrative.)
Without that higher tier, it would have been 91.7 percent.
That's the lesson for any local subscription. You can't stop every cancellation. People move house, change jobs, take up running instead. But you can give the members who stay a reason to spend more: a family add-on at the gym, personal training packs, a premium tier, a bigger box.
What to do next
- Pull a list of every customer who was paying you 12 months ago, with what they paid then and now.
- Split the change into expansion, contraction and churn. Use the calculator.
- Calculate gross retention at the same time. If it's under 90 percent, fix churn before you chase upgrades. Start with the Chapter 9 playbook on reducing churn.
- Pick one expansion lever for the next quarter: a higher tier, an add-on, or a price rise for new customers.
Retention also drives what a buyer will pay for your business. If you're in Australia and want to know how your NRR, margins and cash flow affect your valuation, a BPAG adviser can walk you through it. See how SaaS valuation multiples work first.
Free Subscription Profit Review
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- whether a subscription model could work for your business
- how recurring revenue could cover your fixed costs each month
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Frequently asked questions
Does net revenue retention include price increases?
Yes. A price rise on an existing customer is extra revenue from that customer, so it counts as expansion in NRR. SaaS Capital's definition of gross revenue retention explicitly excludes upsells, cross-sells and price increases, which is why it can never go above 100%. If a price rise is driving most of your NRR, say so when you report it. It's real money, but it isn't the same signal as customers choosing to buy more.
Is net dollar retention the same as net revenue retention?
Yes. NDR, NRR and net dollar retention are three names for the same metric. Public companies tend to say net dollar retention (Snowflake, JFrog and DocuSign all used it in the figures quoted in the book). ChartMogul, Stripe and most analytics tools say NRR. Check how each company defines it before comparing, because some use trailing 12-month averages and some exclude small customers.
Should I calculate NRR monthly or annually?
Report it annually, track it monthly. Annual NRR is what investors and benchmarks use, so a 12-month cohort is the honest comparison. Monthly NRR is useful as an early warning, but don't compare a monthly figure with an annual benchmark. A monthly NRR of 101% compounds to roughly 112.7% over a year.
Do reactivated customers count in NRR?
Only if they were in your starting group. A customer who cancelled before the start of the period and came back is usually treated as new revenue. ChartMogul's movement formula adds reactivation MRR for customers inside the cohort. Whatever you choose, write the rule down and apply it every month so the trend means something.
How does NRR affect what my business is worth?
Buyers pay more for revenue that grows on its own. In SaaS Capital's 2025 data, companies with NRR above 130% grew at a median of 50% a year, against 15% for companies below 90%. Faster, more predictable growth supports a higher revenue multiple. A valuation also depends on margins, size and risk, so use NRR as one input, not the whole answer.
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Robert Coorey, MBA
Robert is the author of The Subscription Playbook and Feed a Starving Crowd and a Director at BPAG Accountants in Sydney. More about Robert.
Sources
- SaaS Capital, 2025 B2B SaaS Retention Benchmarks (Sept 2025)
- SaaS Capital, What is a good retention rate for a private SaaS company in 2025? (18 Sept 2025)
- ChartMogul, SaaS retention: the AI churn wave (10 Dec 2025)
- ChartMogul, Net revenue retention definition
- Procore, Q4 and full-year 2025 results (12 Feb 2026)
- The Subscription Playbook, Chapters 4, 7 and 9 (Robert Coorey, 2022)
Facts and prices checked 27 October 2026. Spotted something out of date? Tell us.