Definition
Net retention is the same idea as NRR: revenue retained from a cohort including expansion and contraction.
Formula
Net retention = (starting revenue + expansion - contraction - churn) / starting revenue
Measured as
Net retention = (starting revenue + expansion - contraction - churn) / starting revenue
Operator takeaway
- Keep Net Retention consistent by cohort, segment, and period before you use it as a decision signal in planning or reporting.
- Interpret the metric alongside retention, margin, or payback so one ratio does not hide the real operating trade-off.
Next decision
- Quantify the impact with Retention Curve Calculator if you need to turn the definition into an operating assumption.
- Read Retention curves: how to read them and why they matter if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.
Where to use this on MetricKit
Calculators
- Retention Curve Calculator: Model a simple cohort retention curve (logo retention) and translate it into expected revenue and gross profit over time.
- Revenue Retention Curve Calculator: Model GRR and NRR over time from monthly expansion, contraction, and churn assumptions (existing cohort only).
- Retention Targets Planner (NRR/GRR): Compute required expansion (for a target NRR) and allowable churn+contraction (for a target GRR) using monthly rates.
Guides
- Retention curves: how to read them and why they matter: A practical guide to retention curves: what they show, how to interpret churn vs retention, and how to connect retention to LTV and payback.
- Revenue retention curves: GRR vs NRR over time (how to model): A practical guide to revenue retention curves: how GRR and NRR compound, how to interpret expansion vs churn, and how to avoid common mistakes.
- NRR/GRR targets: how to translate targets into expansion and churn goals: A practical guide to retention targets: how NRR maps to required expansion and how GRR maps to maximum churn+contraction (with monthly vs annual units).