Net Revenue Retention (NRR) Calculator
Get a handle on customer retention. Small changes in customer retention can have big implications for growth and revenue. Calculating NRR is the first step to plugging revenue leaks and optimizing for long-term value.
Keen to improve your revenue retention rate? Upollo can help.
Calculate Net Revenue Retention
What is NRR, NDR, and GRR?
Net Revenue Retention (NRR), also known as Net Dollar Retention (NDR), is a crucial metric for SaaS businesses. It measures the percentage of recurring revenue retained from existing customers over time, including expansions, upsells, and cross-sells, while accounting for churn and downgrades. Gross Revenue Retention (GRR) is similar, but GRR doesn’t include expansion revenue.
The Formula for NRR:
NRR = (Starting MRR + Expansion MRR - Churned MRR - Downgraded MRR) / Starting MRR × 100
Here’s what you need to calculate your NRR:
- Starting MRR: Monthly Recurring Revenue at the beginning of the period
- Expansion MRR: Additional revenue from existing customers (upgrades, cross-sells)
- Churned MRR: Revenue lost from customers who cancelled
- Downgraded MRR: Revenue lost from downgrades (e.g. a user has downgraded their plan to a lower tier, or is paying you less than they were before)
The Formula for GRR:
To calculate Gross Revenue Retention (GRR), use the same formula as NRR, but don’t include Expansion revenue:
GRR = (Starting MRR - Churned MRR - Downgraded MRR) / Starting MRR × 100
An Example Scenario
Let's calculate the NRR for a B2B SaaS company with the following metrics:
- Starting MRR: $100,000
- Expansion MRR: $15,000
- Churned MRR: $5,000
- Downgraded MRR: $2,000
NRR = ($100,000 + $15,000 - $5,000 - $2,000) / $100,000 × 100
Here is the formula for NRR with our example values filled in:
NRR = $108,000 / $100,000 × 100 = 108%
This NRR of 108% indicates that the company is not only retaining its existing revenue but growing it by 8% from the existing customer base, even after accounting for churn and downgrades.
For comparison, let's calculate GRR for the same example:
GRR = ($100,000 - $5,000 - $2,000) / $100,000 × 100 = 93%
The difference between NRR (108%) and GRR (93%) highlights the impact of expansion revenue on overall growth. This 15 percentage point gap represents the company's success in upselling and cross-selling to existing customers. It demonstrates that while the company is losing some revenue to churn and downgrades, it's more than making up for those losses through expansion strategies. This underscores the importance of not just retaining customers, but actively working to increase their value over time – a key strategy for sustainable SaaS growth.
Keen to learn more? Read our guide: How to Measure Churn, NRR, NDR, GRR
NRR Benchmarks
According to OpenView Partners, Net Dollar Retention (NDR) has become the industry standard for benchmarking churn and comparing SaaS companies. Top-performing companies typically achieve NDR rates of 110–120% or higher, experiencing what's known as "net negative churn." While specific "good" NDR rates can vary by industry and company stage, generally, rates over 100% are considered excellent, indicating revenue growth from existing customers.
Our NRR Benchmarks for B2B SaaS:
- <80% Bad
- 80–99% Ok
- >100-120% Good
- 120%+ Excellent
If your NRR isn’t over 100%, it's in your best interest to understand why, and take immediate steps to fix it. Sustainable, long term growth comes from both acquiring new customers, as well as expanding from your existing users. Industry leaders in tech consistently report high NRR rates, as shown in our next section.
How Top Tech Companies Are Performing: NRR
Consistently high NRR rates showcase these companies' ability to not only retain customers but significantly increase revenue from them over time.
- Twilio reported a Dollar-Based Net Expansion Rate was down to 102% for Q2 2024 compared to 103% in 2023.
- Despite being down from 116% in 2023, Pagerduty’s dollar-based Net Retention Rate of 106% is still relatively healthy.
- Snowflake announced a Net Revenue Retention Rate of 128% in their recent Q1 FY2025 earnings report.
- Datadog reported a dollar-based net retention rate "in the mid-130%'s" in previous periods, indicating strong upselling and expansion within their customer base.
How to Increase NRR
Leverage Data-Driven Customer Success Programs
Implement a comprehensive customer success program that utilizes all available user data and touchpoints. Use predictive analytics to identify usage patterns, engagement levels, and potential pain points. This proactive approach allows CSMs to intervene before issues escalate, ensuring customers are fully realizing the value of your product.
Develop Strategic Upsell Pathways
Create a clear, value-based upgrade strategy that aligns with your customers' growth and evolving needs. Use your data insights to identify when customers are ready for more advanced features or increased capacity. Train your CSMs to have meaningful conversations about how these upgrades can drive further success for the customer.
Expand via Cross Sell
Introduce complementary products that enhance your core offering. By providing a wider range of solutions within your ecosystem, you increase the overall value proposition and make it harder for customers to switch providers. CSMs can analyze usage data to recommend relevant add-ons that address specific customer needs.
Implement Early Warning Systems for Churn Risk
Utilize your data analytics capabilities to create an early warning system for at-risk accounts. Look for signals such as declining usage, reduced feature adoption, or decreased engagement with support resources. Equip your CSMs with this information so they can proactively reach out and address concerns before they lead to churn.
Upollo automatically finds customers likely to churn - as well as the reasons why! We make it easy to do this at scale by sending Churn Scores to the services you already use, such as Intercom or Loops.so.
Create a Value-Driven Customer Loyalty Program
Develop a loyalty program that goes beyond simple rewards, focusing instead on delivering increasing value over time. This could include exclusive access to new features, personalized training sessions, or priority support. Use your data to tailor these offerings to each customer's specific needs and usage patterns, reinforcing the long-term value of staying with your solution.
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Turn Insights into NRR
Identify at-risk accounts, spot expansion opportunities, and drive sustainable growth. Start transforming your NRR insights into tangible results.
Frequently Asked Questions: Net Revenue Retention (NRR)
While it varies by industry and company stage, many SaaS companies aim for NRR targets to be between at least 80% to be considered “healthy”. An NRR above 100% indicates that your revenue from existing customers is growing, even accounting for churn and downgrades. Generally, an NRR over 115% is considered very good.
Most companies calculate NRR on a monthly or quarterly basis. Consistent tracking allows you to identify trends and respond quickly to changes in customer behavior.
No, NRR (Net Revenue Retention) cannot be negative. NRR ranges from 0% to potentially infinite. A 0% NRR represents the worst-case scenario where a company retains no customers and has no expansion revenue. Any value above 0% indicates some level of revenue retention or growth from the existing customer base.
Net Revenue Retention (NRR) and Net Dollar Retention (NDR) are essentially the same metric, just with different names. Both measure the percentage of recurring revenue retained from existing customers over time, including expansions, up-sells, and cross-sells, while accounting for churn and contractions. The choice of term often depends on company preference or industry norms, but they calculate and represent the same thing. You may also see it referred to as Net Retention Rate (NRR) or Dollar-Based Net Retention Rate (DBNRR) in some contexts.
While churn rate focuses solely on the number or percentage of customers lost, NRR provides a more holistic view of your recurring revenue health. NRR accounts for both lost revenue (churn and downgrades) and gained revenue (expansions) from your existing customer base.
Churn rate is the percentage of customers or revenue lost over a specific period. We also have a Churn Rate Calculator you can use for free. Here's how to calculate it yourself:
The formula for customer churn rate:
(Number of customers lost during the period / Number of customers at the start of the period) × 100
Example: If you started the month with 500 customers and lost 20, your monthly customer churn rate would be (20 / 500) × 100 = 4%
The formula for revenue churn rate:
(MRR lost to churned customers during the period / Total MRR at the start of the period) × 100
Example: If your MRR at the start of the month was $100,000 and you lost $3,000 to churned customers, your monthly revenue churn rate would be (3,000 / 100,000) × 100 = 3%
It's important to calculate both customer and revenue churn rates, as they can provide different insights into your business health.
The formula for NRR remains the same whether you're calculating it monthly or yearly. The time frame and data points you use will differ:
To Calculate Monthly NRR:
Use data from a single month.
NRR = (Starting MRR + Expansion MRR - Churned MRR - Contraction MRR) / Starting MRR × 100
Example: If your Starting MRR was $100,000, you gained $5,000 in expansions, lost $2,000 to churn, and had $1,000 in contractions, your monthly NRR would be:
($100,000 + $5,000 - $2,000 - $1,000) / $100,000 × 100 = 102%
To Calculate Yearly NRR:
Use data from the entire year. Replace MRR with ARR (Annual Recurring Revenue).
NRR = (Starting ARR + Expansion ARR - Churned ARR - Contraction ARR) / Starting ARR × 100
Example: If your Starting ARR was $1,200,000, you gained $180,000 in expansions, lost $60,000 to churn, and had $24,000 in contractions over the year, your yearly NRR would be:
($1,200,000 + $180,000 - $60,000 - $24,000) / $1,200,000 × 100 = 108%
Calculating both monthly and yearly NRR can provide valuable insights. Monthly NRR helps you spot short-term trends and react quickly to changes, while yearly NRR gives you a broader view of your company's growth trajectory.
NRR is a relatively simple calculation that can be calculated in a typical spreadsheet such as Google Sheets or Excel. We’ve created a template in Google Sheets which you can copy for free.
To create an NRR calculator in Google Sheets or Excel:
- Add 7 columns for the following:
- Month
- MRR (Start of Period)
- Expanded MRR
- Churned MRR
- Downgraded MRR
- MRR (End of Period)
- NRR Rate (as a percentage)
- For the MRR (End of Period) column, calculate this by adding your MRR (Start of period) and Expanded MRR together, and then subtracting Churned MRR and Downgraded MRR.
- For the NRR Rate column, calculate this by subtracting the End of Period from the Start of Period, then dividing by the Start of Period, and finally, adding 1. You should be left with a decimal value e.g. 1.05 which is 105% when expressed as a percentage.
- Add additional rows for each month you want to calculate an NRR for. Typically, this will be done for an entire year, so add 12 rows beneath your headings. Ensure your calculations from above are copied for each row.
- You can now add in specific dollar values for each month, and calculate your NRR for each month.
Feel free to copy our Google Sheets NRR Calculator template for free.
No, NRR (Net Revenue Retention) does not include new customers. NRR specifically measures the revenue changes from your existing customer base over a given period. It takes into account revenue from renewals, upgrades, cross-sells, and expansions, as well as revenue lost due to downgrades or churn. New customer acquisition is tracked separately and is not part of the NRR calculation.