Definition
Net revenue retention (NRR), sometimes called net dollar retention, measures how much recurring revenue you keep from a group of existing customers over a period, after cancellations, downgrades and upgrades. It ignores new customers entirely.
Formula
NRR = (starting MRR − churned MRR − downgrades + expansion MRR) ÷ starting MRR
It's usually measured over a year for established companies, and monthly for young ones.
Example
Existing customers paid $20,000 MRR at the start of the month. During the month you lost $500 to cancellations and $200 to downgrades, and gained $900 from upgrades.
NRR = ($20,000 − $500 − $200 + $900) ÷ $20,000 = 101%
Why above 100% matters
NRR above 100% means your existing customers are growing their spend faster than others leave. Revenue grows even with zero new customers. It's one of the strongest signals a subscription business can show, and it usually comes from pricing that grows with usage or team size.
How it differs from churn
Churn rate only counts what you lose. NRR also counts what existing customers add. A company can have meaningful churn and still have NRR above 100% if upgrades are strong.
Common mistakes
- Including revenue from new customers, which inflates the number.
- Comparing monthly NRR to annual benchmarks.