Net revenue retention (NRR), also called net dollar retention, measures how much recurring revenue you keep from a cohort of existing customers over a period, after accounting for upsell, cross-sell, downgrades, and churn. New-customer revenue is deliberately excluded, so NRR isolates the health of the base you already won.
How it is calculated
Take the starting recurring revenue of a cohort, add expansion, subtract contraction and churn, then divide by the starting revenue. If a cohort started at $1.0M, expanded by $250K, and lost $100K to downgrades and cancellations, NRR is ($1.0M + $250K - $100K) / $1.0M = 115%.
NRR above 100% is the holy grail of SaaS: it means the existing base grows even if you never sign another customer. The best-in-class B2B software companies run NRR in the 120% to 130% range. Investors weigh NRR heavily because it captures durability, pricing power, and product stickiness in a single number.
- NRR includes expansion, so it can exceed 100%.
- Gross revenue retention excludes expansion, so it is always at or below 100% and is the floor of your retention.
- A high NRR can hide a churn problem if a few large expansions are masking many small cancellations. Always read NRR and GRR together.
Moving NRR is the strategic job of customer success: protect the base by catching every at-risk account, and grow it by spotting expansion signals in product usage and account health.