Value Metric
Net Revenue Retention (NRR)
Net Revenue Retention (NRR) is the percentage of recurring revenue kept from existing customers, including expansion and churn.
What is Net Revenue Retention (NRR)?
Net Revenue Retention measures how recurring revenue from your existing customer base changes over a period once you account for expansion (upgrades, cross-sells, seat growth), contraction (downgrades), and churn — but excluding revenue from brand-new customers.
NRR above 100% means your existing customers grow in value faster than others leave, so the business would expand even if you stopped acquiring entirely. It is one of the most closely watched health metrics in SaaS.
How to calculate it
NRR = (Starting MRR + Expansion − Contraction − Churn) ÷ Starting MRR × 100
- Starting MRR
- Monthly recurring revenue from the cohort at the start
- Expansion
- Added revenue from upgrades / cross-sell / seats
- Contraction
- Lost revenue from downgrades
- Churn
- Lost revenue from cancellations
Worked example
Start at $100k MRR, add $20k expansion, lose $5k contraction and $7k churn: NRR = ($100k + $20k − $5k − $7k) ÷ $100k × 100 = 108%.
What good looks like
- Good (B2B SaaS)> 100%
Above 100% is healthy; best-in-class B2B SaaS reaches 120%+, meaning expansion alone outpaces all churn.
Source: SaaS Capital
Why it matters
NRR captures the compounding power of a happy customer base. High NRR means growth gets easier over time because your installed base keeps expanding on its own, and it makes every dollar of acquisition more valuable. Sustained NRR below 100% means you are refilling a leaky bucket with every new sale.
How to improve Net Revenue Retention (NRR)
Drive expansion revenue
Build natural upgrade paths — usage tiers, seats, add-ons — and prompt them in-product at the moment of value.
Reduce downgrades and churn
Interview accounts that contract or leave to find the value gaps, then close them before renewal.
Frequently asked questions
What is a good net revenue retention?
For B2B SaaS, NRR above 100% is healthy and 120%+ is best-in-class, meaning revenue from existing customers grows even before adding new ones. Consumer and SMB products typically run lower because expansion opportunities are smaller.
What is the difference between NRR and gross revenue retention?
Gross revenue retention (GRR) only counts revenue lost to churn and contraction and can never exceed 100%. NRR also includes expansion revenue, so it can exceed 100%. Comparing the two shows how much expansion is masking underlying churn.