What Is Net Revenue Retention (NRR)?
The percentage of recurring revenue retained from existing customers over a period, including expansions and contracting, excluding new customers.
Net Revenue Retention (NRR) Explained
Net revenue retention measures how much your existing customer base grows or shrinks over time. It includes upsells, cross-sells, and expansions (which increase NRR) as well as downgrades, churn, and contractions (which decrease NRR).
An NRR above 100% means your existing customers are spending more over time. This is the holy grail of recurring revenue businesses because it means the company grows even without acquiring new customers. The best SaaS companies achieve 120-140% NRR.
The calculation starts with revenue from a cohort of customers at the beginning of a period. At the end of the period, measure revenue from those same customers (including expansions and net of churn). Divide the ending number by the starting number.
NRR is the single most important metric for recurring revenue businesses because it indicates product-market fit, pricing power, and customer satisfaction simultaneously. A company with 80% NRR is losing 20% of its revenue base annually and must acquire aggressively just to stay flat.
Why Net Revenue Retention (NRR) Matters
NRR above 100% means a business grows even if it stops acquiring new customers. This is the most valuable characteristic a recurring revenue business can have, and it dramatically impacts valuation multiples. High-NRR companies trade at 2-3x higher multiples.
How to Calculate Net Revenue Retention (NRR)
NRR = (Starting Revenue + Expansions - Contractions - Churn) / Starting Revenue x 100Common Mistakes
- 1
Confusing gross revenue retention (excludes expansions) with net revenue retention (includes expansions)
- 2
Calculating NRR including revenue from new customers, which inflates the number
- 3
Not segmenting NRR by customer cohort, which hides problems in recent cohorts
Related Terms
Churn Rate
The percentage of customers who stop using your product or service over a given period, indicating retention health and product satisfaction.
Customer Lifetime Value (LTV)
The total revenue a business expects from a single customer over the entire duration of their relationship.
Run-Rate Revenue
Annualized revenue projection based on current performance, used to estimate future revenue by extrapolating a recent period's results.
Same-Store Sales Growth
Revenue growth at existing locations compared to the same period last year, isolating organic growth from growth driven by opening new locations.
How Attainment Helps
Related Services
Frequently Asked Questions
What is a good net revenue retention rate?
For B2B SaaS: 110%+ is good, 120%+ is excellent, 130%+ is elite. For service businesses with recurring contracts: 90-100% is good. Below 85% signals a product or service quality issue that needs immediate attention.
How is NRR different from customer retention rate?
Customer retention measures the percentage of customers who stay. NRR measures the percentage of revenue that stays (and grows). You can have 90% customer retention but 110% NRR if remaining customers expand. Revenue retention matters more than logo retention.
Ready to Put This into Action?
Book a Discovery Call. We will show you how Attainment can help with net revenue retention (nrr) and more.
Book a Discovery Call