SaaS Metrics

NRR (Net Revenue Retention)

NRR measures how revenue from an existing cohort changes over time, including expansion and contraction.

Updated 2026-01-23

Definition

NRR measures how revenue from an existing cohort changes over time, including expansion and contraction.

Formula

NRR = (starting MRR + expansion - contraction - churn) / starting MRR

Example

If starting MRR is $100k, expansion is $15k, contraction is $5k, and churn is $10k, NRR = ($100k+$15k-$5k-$10k)/$100k = 100%.

How to use it

  • NRR > 100% means the cohort grows without new customers.
  • Track NRR by segment (plan, size) to avoid blended averages.

Common mistakes

  • Using different cohorts for starting MRR vs expansion/churn (inconsistent denominators).
  • Letting expansion hide churn (track GRR alongside NRR).

Measured as

NRR = (starting MRR + expansion - contraction - churn) / starting MRR

Misused when

  • Using different cohorts for starting MRR vs expansion/churn (inconsistent denominators).
  • Letting expansion hide churn (track GRR alongside NRR).

Operator takeaway

  • NRR > 100% means the cohort grows without new customers.
  • Track NRR by segment (plan, size) to avoid blended averages.
  • Keep NRR (Net Revenue 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 NRR Calculator if you need to turn the definition into an operating assumption.
  • Read NRR (Net Revenue Retention): definition, formula, how to calculate if the decision depends on interpretation, policy, or trade-offs beyond the raw formula.

Where to use this on MetricKit

Calculators

Guides