Glossary / NRR
NRR(Net Revenue Retention)
Net revenue retention (NRR) measures how much revenue from existing customers grows or shrinks year-over-year, including upgrades, downgrades, and churn. NRR over 100% means existing customers are expanding faster than churning. NRR is a critical SaaS metric because it shows whether the business compounds without new customer acquisition.
Formula
NRR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100
Example
A SaaS business starts the year with $100K MRR from existing customers. Over the year, expansion adds $15K, contraction subtracts $3K, and churn subtracts $5K. NRR = ($100K + $15K - $3K - $5K) / $100K = 107%. Existing customers grew 7% even though some churned.
Why it matters
NRR over 100% is the holy grail of SaaS — the existing customer base alone drives revenue growth. Industry benchmarks: best-in-class SaaS hits 120%+ NRR; healthy SaaS targets 100-110%; below 90% indicates retention problems.
Related terms
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