Net revenue retention (NRR) is the percentage of recurring revenue a fixed group of existing customers still pays at the end of a period. It counts expansion, contraction and churn and leaves new customers out. For churn on its own, see the average SaaS churn rate.
The short answer to what is net revenue retention fits in one line; the useful part is which dollars count. Median NRR by segment is in our 2026 customer success statistics. NRR stands for net revenue retention, also called net dollar retention.
When an investor asks “what is NRR” for your company, the real question is whether the existing base grows without new logos.
Below: the formula, a ten-customer example, benchmarks by ACV band, and common mistakes.
What Is Net Revenue Retention (NRR)?
Net revenue retention is a fixed customer group’s recurring revenue at period end, as a percentage of its revenue at the start. It measures how much of your existing revenue base survives expansion, contraction and churn, with new customers left out.
The NRR meaning comes down to one test: does this dollar come from a customer who was already paying at the start?
- Counted as gain: expansion, including upsells, cross-sells, extra seats and price changes.
- Counted as loss: contraction and churn, the dollars lost to downgrades and cancellations.
- Left out: new customers, including their later expansion if they joined after the period start.
SaaS Capital, Sep 2025 counts only MRR from customers who were already customers a year earlier. Datadog’s annual report (Datadog, Feb 2026) excludes ARR from new customers. Does net revenue retention include new customers? No, and not their later expansion either.
The net revenue retention definition above also covers its other names, net dollar retention and net retention rate. What is NRR in SaaS? The same ratio on recurring subscription revenue: SaaS Capital measures it on MRR, while Benchmarkit’s cohort method and Datadog use ARR.
What NRR Tells You
NRR tells you whether your existing customers grow or shrink your revenue on their own. Above 100% the base is expanding; below 100% new sales must refill it first.
In SaaS Capital’s 2025 survey of private B2B SaaS companies above $1M ARR, median growth was 24%. Companies with NRR of 110% or more grew faster than that, and those below 100% grew slower. That is a correlation, not proof of cause.
Net Revenue Retention Formula
The net revenue retention formula uses four numbers for the customers you had at the start. That is how to calculate net revenue retention: add expansion, subtract contraction and churn, then divide by starting MRR.
Written as amounts, the NRR formula is:
NRR = (Starting MRR + Expansion – Contraction – Churn) / Starting MRR
Multiply by 100 to get the percentage, which is the net revenue retention rate:
NRR (%) = NRR ratio x 100
- Starting MRR: the monthly recurring revenue of every customer paying on day one of the period.
- Expansion: extra MRR from those customers through upsells, cross-sells, price increases, more seats or more usage.
- Contraction: MRR lost when those customers downgrade but stay.
- Churn: MRR lost from those customers who cancel.
The cohort is fixed on day one of the period. Datadog’s filing uses the same rule: current ARR from existing customers divided by their ARR 12 months earlier.
Net Revenue Retention Example
The table shows a made-up book of ten customers, with each one’s MRR at the start and end of a year. It is the net revenue retention example the rest of this page reuses.
| Customer | Starting MRR | Ending MRR | Movement |
|---|---|---|---|
| A | $5,000 | $0 | Churn |
| B | $6,000 | $4,500 | Contraction |
| C | $6,000 | $6,000 | Flat |
| D | $5,000 | $5,000 | Flat |
| E | $5,000 | $5,000 | Flat |
| F | $5,000 | $9,500 | Expansion |
| G | $4,000 | $7,000 | Expansion |
| H | $6,000 | $7,500 | Expansion |
| J | $4,000 | $3,500 | Contraction |
| K | $4,000 | $4,000 | Flat |
| Total | $50,000 | $52,000 | Net +$2,000 |
Customers L ($4,000) and M ($3,000) signed during the year. Their $7,000 of MRR stays out because they were not customers at the start.
The NRR calculation takes three steps:
- Add the starting MRR of the ten customers: $50,000.
- Add the ending MRR of those same ten customers, counting churned customer A at $0: $52,000.
- Divide: $52,000 / $50,000 = 1.04, an NRR of 104.0%.
The book grew 4% with no new sales, even though one customer left and two downgraded.
The ten customers are a made-up book. Every figure on this page that refers to it is plain arithmetic on these MRR values, with no vendor data.
Formula Variants: Cohort, MRR Bridge and Time Period
Two correct-looking NRR calculations can disagree because of the method or the period.
| Method | What it counts | When it breaks | Who uses it |
|---|---|---|---|
| Cohort (customer-level) | Each starting customer’s MRR at the start and at the end | When the cohort is rebuilt from customers alive at the end | SaaS Capital, Benchmarkit’s recommended method, Datadog’s filing |
| MRR bridge (aggregate) | Starting MRR plus expansion minus contraction minus churn | When new-customer MRR leaks into the ending total | Finance and RevOps teams reading which lever moved (our judgment) |
Cohort Method vs MRR Bridge
The cohort method divides the ending MRR of the starting customers by their starting MRR: $52,000 / $50,000 = 104.0% on the example book.
The bridge adds the movements instead: ($50,000 + $9,000 – $2,000 – $5,000) / $50,000 = 104.0%.
The two match while no new-customer MRR enters the bridge. If L and M’s $7,000 lands in the ending total, the bridge reads 118.0%, which is 14.0 points too high.
Monthly, Quarterly and Annual NRR
Benchmark reports use an annual window. Benchmarkit, May 2025 advises a year-over-year or trailing twelve-month basis to capture seasonality, especially under usage or hybrid pricing.
Monthly NRR compounds, so you cannot add it up. A 98% month annualises to 0.98^12 = 78.5%, not the 76.0% you get by adding the 2-point loss twelve times (our calculation).
A 102% month gives 126.8%, not 124.0%, and a 97% quarter gives 88.5% a year.
Our rule: report trailing twelve months for benchmarks, and track monthly or quarterly NRR to catch problems early.
What Moves Net Revenue Retention
Three levers move net revenue retention, one for each line of the formula. Here they are on the example book, each as a share of the $50,000 starting MRR.
- Expansion: upsells, cross-sells, extra seats or usage and price increases. It adds $9,000, and $9,000 / $50,000 = 18.0 points.
- Contraction: downgrades by customers who stay. It removes $2,000, and $2,000 / $50,000 = 4.0 points.
- Churn: customers who cancel, voluntarily or through failed payments. It removes $5,000, and $5,000 / $50,000 = 10.0 points.
Put together: 100 – 10.0 – 4.0 + 18.0 = 104.0%.
A few accounts can expand a lot: customer F alone added $4,500, half the book’s expansion, and without it NRR would be 95.0%.
List prices can also rise: a 5% increase on the nine retained customers adds 4.5 points. Under a usage or hybrid model, rising usage lifts NRR with no new contract.
SaaS Capital counts price increases, upgrades, upsells and cross-sells as, in effect, new sales that net retention still includes.
When a few customers drive the expansion, the revenue base carries customer concentration, a risk SaaS Capital flags.
Takeaway: Before trusting an NRR above 100%, check how much of the expansion comes from your top one or two accounts.
What Is a Good Net Revenue Retention Rate?
A good net revenue retention rate starts near the 101% median, and above 100% the base grows with no new sales. That median appears in both SaaS Capital’s 2025 survey of private B2B SaaS companies and Benchmarkit’s 2025 report.
Median gross revenue retention (GRR), which leaves expansion out, is 91% and 88% respectively.
The table shows net revenue retention benchmarks by annual contract value (ACV) band, with NRR quartiles and median GRR. Growth and margin figures are in our SaaS industry benchmarks.
| ACV band | NRR 25th percentile | NRR median | NRR 75th percentile | Median GRR |
|---|---|---|---|---|
| Under $12k | 90% | 98% | 106% | 90% |
| $12k to $25k | 98% | 103% | 115% | 91% |
| $25k to $50k | 97% | 102% | 111% | 91% |
| $50k to $100k | 96% | 104% | 110% | 90% |
| $100k to $250k | 94% | 102% | 109% | 91% |
| Over $250k | 102% | 106% | 110% | 95% |
Source: SaaS Capital 2025 retention benchmarks. The $25k to $50k row is stated in its text, the other rows are chart data; companies above $1M ARR.
GRR benchmarks, churn conversions and the other retention metrics are in our SaaS retention metrics guide.
How to Read Any NRR Number
Below 100% your base shrinks without new sales, 100% is break-even, and above 100% it grows on its own. The lookup shows what each NRR does to $100 of starting MRR over one, three and five years.
| NRR | $100 after 1 year | After 3 years | After 5 years |
|---|---|---|---|
| 80% | $80.0 | $51.2 | $32.8 |
| 90% | $90.0 | $72.9 | $59.0 |
| 95% | $95.0 | $85.7 | $77.4 |
| 100% | $100.0 | $100.0 | $100.0 |
| 105% | $105.0 | $115.8 | $127.6 |
| 110% | $110.0 | $133.1 | $161.1 |
| 120% | $120.0 | $172.8 | $248.8 |
| 130% | $130.0 | $219.7 | $371.3 |
A $100 cohort falls to $51.2 at 80% NRR and rises to $172.8 at 120% in three years
value of $100 of starting MRR after three years at a constant NRR, no new customers
| Item | value of $100 of starting MRR after three years at a constant NRR, no new customers |
|---|---|
| 80% | $51.2 |
| 90% | $72.9 |
| 100% | $100.0 |
| 110% | $133.1 |
| 120% | $172.8 |
| 130% | $219.7 |
The lookup compounds a constant NRR on $100 of starting MRR with no new customers; it is arithmetic, not a forecast.
Expansion has to cover the gap between GRR and the NRR you want. At SaaS Capital’s 91% median GRR, 100% NRR needs 9 points of expansion and 120% needs 29.
On the example book, whose GRR is 86%, 100% needs $7,000 of expansion on $50,000.
Takeaway: Read your NRR against the GRR beneath it before comparing it with the benchmark table above. The same NRR can come from very different churn.
What 95% NRR Means
95% NRR is weak for most price points. It sits under the 25th percentile in 4 of the 6 ACV bands in SaaS Capital’s chart data. It means 5 of every 100 starting dollars are gone, net of expansion, and $100 becomes $85.7 in three years.
An early company with few accounts can live with it for a while, in our judgment.
What 120% NRR Means
120% NRR means existing customers pay 20% more after a year with no new sales, and $100 becomes $172.8 in three years.
Datadog reported about 120% on a trailing 12-month basis at the end of 2025. Snowflake reported 125% at January 2026 on a two-year revenue window, so the bases differ. In SaaS Capital’s chart data, 120% sits above the 75th percentile in all six ACV bands.
For a private B2B SaaS company it is a top-quartile result, not a default target. The two public examples sell usage-based platforms, where usage growth counts as expansion.
NRR vs GRR, NDR, ARR and MRR
NRR differs from GRR by counting expansion, from NDR only by name, and from ARR and MRR by being a rate, not a size.
| Metric | Measures | Basis | Range | Question it answers |
|---|---|---|---|---|
| NRR | Revenue kept from a fixed starting cohort, expansion included | MRR or ARR of starting customers | 0% to well above 100% | Does the base grow on its own? |
| GRR | Revenue kept, each customer capped at its starting value | Same as NRR | 0% to 100% | How much revenue do we lose? |
| NDR | The same ratio as NRR under another name | Varies by company | Same as NRR | Same as NRR |
| ARR | Annual recurring revenue, a size | Dollars (MRR x 12) | Dollars | How big is the business? |
| MRR | Monthly recurring revenue, a size | Dollars | Dollars | How big is the business this month? |
NRR vs GRR
GRR vs NRR comes down to expansion: gross revenue retention caps each customer at its starting MRR, so it cannot exceed 100%. We set the two side by side in gross retention vs net retention. The GRR formula is (starting MRR – contraction – churn) / starting MRR.
| Metric | Includes expansion | Can exceed 100% | What it hides | Use it when |
|---|---|---|---|---|
| NRR | Yes | Yes | Churn covered by a few expanding accounts | You report growth from the base |
| GRR | No | No | Upsell strength | You judge churn and contraction |
On the example book, GRR is $43,000 / $50,000 = 86.0% against an NRR of 104.0%, a spread of 18.0 points. Logo retention is 9 of 10 customers. In SaaS Capital’s own example, 95% GRR equals 5% churn.
A wide spread means expansion is covering losses, and a spread near zero means little upsell.
For scale, the published medians give a spread of 13 points at Benchmarkit (101% minus 88%). SaaS Capital’s medians give 10 points (101% minus 91%); both are differences of medians.
NRR vs NDR
Net dollar retention vs net revenue retention is a difference of name, not of metric. Datadog calls the same ratio its “dollar-based net retention rate”. Companies window and base it differently, so check the definition before you compare two figures.
NRR vs ARR and MRR
NRR vs ARR is a rate against a size: ARR and MRR are dollar amounts, while NRR is a percentage on a fixed cohort. Datadog defines ARR as MRR times 12, so NRR vs MRR is the same split, a monthly dollar size against a retention rate.
At least one ranking glossary reads ARR as “annual revenue retention”. Filings and benchmark reports use ARR for annual recurring revenue, so assume that unless a page defines it otherwise.
NRR on an ARR basis gives the same percentage if both ends use it: the example book reads $624,000 / $600,000 = 104.0%.
Common NRR Calculation Mistakes
Each mistake below is run on the example book, where the right answer is 104.0%.
| Mistake | Effect on the example book | Fix |
|---|---|---|
| New customers in the numerator | 118.0% instead of 104.0% | Keep anyone who joined mid-period out |
| Cohort built from customers alive at the end | 115.6% | Fix the cohort on day one |
| Monthly NRR annualised by adding | 76.0% instead of 78.5% for a 98% month | Compound it |
| Ending ARR over starting MRR | 1,248% | Use one basis at both ends |
| Downgrades left out | 108.0% | Subtract contraction |
| Segment NRRs averaged (75.9% and 137.0%) | 106.4% instead of 104.0% | Weight by starting MRR |
Every mistake except the annualising one pushes NRR up. Leaving aside the basis mix-up, which no one misses at 1,248%, the two cohort errors are the largest. New logos in adds 14.0 points and dropping churned customers adds 11.6.
Each wrong figure is the example book recalculated with that one mistake; the segment split is customers A to E against F to K.
Takeaway: List the customers in your numerator and confirm each was paying on day one; that one check catches most of these errors.
How to Improve Net Revenue Retention
Improve net revenue retention one formula line at a time, starting with the line the lever breakdown shows is largest.
- Cut churn: find the onboarding and support gaps in churned accounts and fix them. Customer success owns it, with product. SaaS Capital says GRR must be at least 90% to have a shot at performance parity with peers. Multi-year contracts show 103% median NRR and 94% GRR against 100% and 89% for month-to-month, an association, not a cause.
- Cut contraction: right-size plans at renewal before customers downgrade. Customer success and sales own it.
- Grow expansion: upsell, cross-sell and pricing. Sales, customer success and product own it. SaaS Capital describes customer success programs that keep adding value and account management that captures part of it.
Which Number Will You Check First?
Calculate net revenue retention on a cohort fixed at the start and read it next to GRR. Then compare it with a benchmark for your ACV band. Did your last NRR figure include customers who joined mid-period, or expansion from them?
Frequently Asked Questions About Net Revenue Retention
How does net revenue retention affect SaaS valuation?
Net revenue retention is one of three inputs in SaaS Capital’s private valuation model, alongside public-market multiples and ARR growth. As of its January 2025 page, the model predicted 4.8 times run-rate ARR for bootstrapped companies and 5.3 times for equity-backed ones. Expansion also supplied 40% of total new ARR in Benchmarkit’s 2025 report, and over 50% above $50M ARR.
Why is net revenue retention higher for higher-priced products?
Net revenue retention rises with ACV, SaaS Capital explains, because higher-priced products involve longer sales cycles, in-depth scoping and implementation, and dedicated account management. Those make them stickier. Gross retention shows a weaker link: median GRR is 95% above $250,000 of ACV and about 91% below it.
Is net revenue retention the same as net dollar retention?
Yes, they are the same ratio with different windows. SaaS Capital compares December MRR from existing customers with the prior December’s MRR. Datadog averages twelve trailing monthly readings of its rate, and Snowflake compares product revenue from a fixed cohort across two consecutive years. The label matters less than the window behind it.
How does net revenue retention relate to CAC?
Net revenue retention links to CAC through expansion, which costs less to win than new customers. To price a new customer, use our CAC calculator tool. Among companies that report it, Benchmarkit’s 2025 median is $1.00 of sales and marketing per $1.00 of expansion ARR. New-customer ARR costs $2.00 per $1.00, so expansion costs half as much. NRR itself does not measure what keeping customers costs.
Does net revenue retention work for usage-based or hybrid pricing?
Yes, measured on trailing twelve months, which smooths out swings in usage. In Benchmarkit’s 2025 report, companies pricing on subscription plus usage had a 110% median NRR, much higher than usage-only or subscription-only models. The overall median is 101%. Usage growth from existing customers counts as expansion, so these models can post high NRR.
Can net revenue retention be above 100%?
Yes. In SaaS Capital’s definition, NRR runs from 0% to well above 100%. It includes upsells, new-product cross-sells and price increases on top of the revenue you keep. At exactly 100% the starting customers pay what they paid a year earlier, and every point above that is net expansion from customers who stayed.
What does 120% net revenue retention mean?
120% NRR goes with faster growth. SaaS Capital reports a 9-point gain in median growth from the 100% to 110% NRR range to the 110% to 120% range. That is a correlation, not proof of cause. SaaS Capital also reports that the companies with the highest NRR show median growth double the population median.
Is 95% net revenue retention good?
No, 95% is common but below par. In SaaS Capital’s $25k to $50k ACV band, the 25th percentile is 97%, so 95% sits in the bottom quarter, 2 points under that mark. In every band except above $250k, at least a quarter of companies have NRR under 100%, so 95% is not rare. It does mean churn and contraction are outrunning expansion.
What does revenue retention mean?
Revenue retention means the share of a starting revenue base that customers still pay after a period. Gross retention caps each customer at its prior-year MRR, while net retention lets expansion count. SaaS Capital says net retention is always higher than gross retention because it adds upsells. It also describes churn as 1 minus gross retention.
