Net Revenue Retention (NRR)

Definition

Net Revenue Retention (NRR) shows how revenue from your existing customers changes over time, combining the impact of renewals, upsells, cross-sells, price increases, downgrades, and churn into a single percentage. It answers the question: “If no new customers were added this period, how much would revenue from the current base grow or shrink?”

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For B2B SaaS sales leaders, NRR is a core health metric because it reflects both customer satisfaction (churn/downsells) and commercial execution (expansion/upsells). It is cohort-based; you take a starting pool of customers and track only that same group’s recurring revenue one period later.

How to Calculate

Conceptually, you start with beginning-period recurring revenue from existing customers, subtract lost and downgraded revenue, add expansion revenue, and divide by the beginning amount.

Core Formula (ARR-based)

NRR = (Beginning ARR − Churn ARR − Contraction ARR + Expansion ARR) ÷ Beginning ARR

Then multiply by 100 to express as a percentage.

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Where…

• Beginning ARR: Recurring revenue from the existing customer cohort at the start of the period
• Churn ARR: Revenue lost from customers who fully cancel
• Contraction ARR: Revenue lost from downgrades or reduced usage within that cohort
• Expansion ARR: Additional revenue from upsells, cross-sells, seat growth, or price increases in that cohort

Step-by-Step Calculation

1. Pick a cohort (e.g., all active customers as of Jan 1) and sum their ARR at that date.
2. Track that same cohort one period later (e.g., Dec 31), ignoring any new customers added after Jan 1.
3. Break the change into:
   
   • Churn (customers gone)
   • Contraction (same customers, less spend)
   • Expansion (same customers, more spend)
4. Plug into the formula and express as a percentage.

Example

• Beginning ARR from cohort: $1,000,000
• Churn ARR: $70,000
• Contraction ARR: $30,000
• Expansion ARR: $250,000
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NRR = (1,000,000 − 70,000 − 30,000 + 250,000) ÷ 1,000,000 = 1,150,000 ÷ 1,000,000 = 1.15 ⇒ 115%

An NRR of 115% means the existing base grew revenue by 15% without counting any new customers.

Why NRR Matters

NRR is one of the most important metrics for investors and CROs because it captures both retention and expansion in a single number.
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• NRR ≥ 100% means expansion more than offsets churn and contraction, so the existing base is self-growing.
• NRR < 100% means revenue from the base is shrinking and new-logo sales must outrun the leak.
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High-performing B2B SaaS companies (especially enterprise) often target 110–130%+ NRR; best-in-class can reach 130–140%+ in strong product-led or expansion-heavy motions. NRR is also more predictive of long-term value than logo churn alone, since losing a few small customers hurts far less than losing a major account.

Industry Benchmarks

Typical NRR targets by segment (rough, not prescriptive):
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Teams also track…

• NRR by segment (SMB vs. MM vs. ENT)
• NRR by product line
• NRR by cohort (join year, region, industry, CSM/AE)
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This lets sales and CS see where expansion motions work best and where churn risk is concentrated.

Real-World Examples

• A mid-market SaaS company posts 92% NRR in SMB but 120% in mid-market; leadership begins shifting outbound and product roadmap toward mid-market where expansion potential is higher.
  
  
• An enterprise vendor with 128% NRR can grow double-digits year-over-year even with modest new-logo additions, because upsells and price increases from the base drive most growth.
  
  
• A CS-led initiative to improve onboarding boosts first-year NRR from 96% to 108% in a key vertical, turning an at-risk segment into a growth engine.

Common Mistakes

• Including new-customer revenue: NRR must exclude new logos; including them inflates the number and turns it into a blended growth metric instead of a retention/expansion metric.
• Mixing in non-recurring revenue: Implementation and one-time services can distort NRR; most SaaS teams base NRR on recurring revenue only (MRR/ARR).
• Not separating churn vs. contraction: Lumping both as “churn” hides whether the main problem is losing logos entirely or shrinking existing accounts.
• Using logo count instead of revenue: NRR is revenue-based; a few big logo changes matter more than many small ones.
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A solid practice is to define NRR in RevOps, implement it as a standard, and report it consistently alongside Gross Revenue Retention (GRR), which excludes expansion and shows pure “keep” performance.

FAQs

What is a “good” NRR for B2B SaaS?

Generally, anything above 100% is positive; growth-stage and enterprise SaaS often target 110–130%+, with best-in-class at the upper end of that range.

How is NRR different from GRR?

GRR looks only at retained revenue and subtracts churn and contraction, but ignores expansion; NRR includes expansion, so it shows the net effect of both losing and growing revenue in a cohort.

Should NRR be calculated monthly or annually?

You can do both, but annual NRR is more stable and widely used for board/investor reporting; monthly NRR is useful for operational monitoring and early signals.

How does NRR tie to sales and CS performance?

Sales influences expansion and renewals; CS influences adoption, satisfaction, and risk. NRR effectively grades the combined “land + expand + keep” motion across sales and CS.

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Last Updated: December 8, 2025
‍Reviewed by: Ben Hale