Net Revenue RetentionNRR

By Federico Donatone · Updated October 15, 2026

Definition

Net revenue retention (NRR) is the percentage of recurring revenue a company keeps from an existing group of customers over a period, after adding expansion and subtracting downgrades and churn. Revenue from new customers is excluded. NRR above 100% means the existing base grows on its own. Below 100% means it shrinks.

How to calculate net revenue retention

FormulaNRR = (Starting MRR + Expansion - Contraction - Churned MRR) ÷ Starting MRR × 100For example, if customers active a year ago paid $200,000 MRR then, and today the same customers pay $220,000 after $35,000 of upgrades, $5,000 of downgrades and $10,000 of cancellations, NRR is $220,000 ÷ $200,000 × 100 = 110%.

The key rule is a fixed cohort. Take the customers who existed at the start of the period, follow only them, and ignore revenue from anyone who joined later. Mixing in new customers turns NRR into a growth number and hides churn.

A common choice is a trailing twelve months: compare what a cohort paid twelve months ago with what the same customers pay today. Whatever window you choose, state it next to the number every time you report it.

NRR vs GRR (gross revenue retention)

	NRR	GRR
Adds expansion	Yes	No
Subtracts downgrades and churn	Yes	Yes
Can exceed 100%	Yes	No
Answers	Does the base grow on its own?	How much revenue do we keep?

FormulaGRR = (Starting MRR - Contraction - Churned MRR) ÷ Starting MRR × 100With the same example numbers, GRR is ($200,000 - $5,000 - $10,000) ÷ $200,000 × 100 = 92.5%.

Read the two together. High NRR with low GRR means a few accounts expand a lot while many others leave. That growth is fragile, because it depends on a handful of customers.

Why net revenue retention matters, and where it misleads

NRR shows how much of next year's growth already sits in the customer base. Above 100%, the company grows even with no new deals, and every new customer adds on top. Below 100%, sales must first replace what was lost before any growth shows.

For a B2B sales team this changes the plan. A company with weak NRR needs more new ARR just to stand still, which makes every point of customer acquisition cost hurt more. Strong NRR does the opposite: each new account is worth more over time, so the business can afford more effort to win it. Read the number with care, though:

Small cohorts: with few customers, one large upgrade or one lost account swings the number.
Price increases: a list price rise counts as expansion, even though no customer bought anything new.
Annual contracts: revenue only moves at renewal, so a quarterly NRR can look stable while trouble builds.
Survivor cohorts: measuring only customers who are still active leaves churn out entirely.

How to improve NRR

Sell to the right accounts. Expansion is far easier in companies that match your ideal customer profile.
Plan expansion paths from the start: seats, teams, regions or products the customer can add.
Build relationships with several stakeholders, not one champion.
Track usage and outcomes so you see contraction coming before renewal.
Treat renewals and upsells as opportunities with an owner and a date in the CRM.

From our workAgree on the period and the cohort before you report NRR. A trailing twelve months and a single month annualized give different answers, and switching between them is a common way the number gets inflated.

The same rule appears in our B2B Outbound Evidence Standard: when a definition changes, it is a new metric. To find more accounts that look like your best expanding customers, start from how to build a B2B lead list.

Net Revenue Retention FAQ

What is a good net revenue retention rate?

The clearest line is 100%. Above it, existing customers grow revenue on their own. Below it, the base shrinks and new sales have to fill the gap. Where your company should sit above that line depends on your segment, pricing model and how much room customers have to expand.

What is the difference between NRR and NDR?

None in practice. Net dollar retention (NDR) is another name for net revenue retention. Both measure recurring revenue kept from an existing cohort after expansion, downgrades and churn.

Can NRR be higher than 100%?

Yes. When existing customers add more revenue through upgrades and new products than the company loses through downgrades and cancellations, NRR goes above 100%. Gross revenue retention, which ignores expansion, can never exceed 100%.

Related terms

Churn RateChurn rate is the percentage of customers, or of recurring revenue, that a company loses during a period. Customer churn counts accounts that cancel or do not renew. Revenue churn counts the recurring revenue lost to cancellations and downgrades. Subscription businesses track churn rate monthly or yearly because it limits how fast they can grow. ARRARR (annual recurring revenue) is the yearly value of all active subscription and contract fees a company expects to repeat, normalized to a 12-month period. It counts only recurring fees, not one-time setup, services or usage spikes. B2B software companies use annual recurring revenue to size the business, track growth and plan hiring. MRRMRR (monthly recurring revenue) is the predictable subscription revenue a company earns in one month from all active customers, with every contract converted to a monthly amount. It excludes one-time fees and services. Subscription businesses track MRR to see growth early, because new deals, upgrades, downgrades and cancellations show up in it within weeks. Customer Lifetime ValueCustomer lifetime value (CLV, often called LTV) is an estimate of the total gross profit a company earns from one customer over the whole relationship, from first payment to cancellation. Subscription businesses usually calculate it from average revenue per account, gross margin and churn rate. It sets the ceiling on what you can spend to win a customer. MultithreadingMultithreading in sales is the practice of building relationships with several people inside a target account instead of relying on one contact. A multithreaded deal has links to the decision maker, the users, technical evaluators and others in the buying group, so it survives when one person goes quiet, changes jobs or loses influence. Ideal Customer ProfileAn ideal customer profile (ICP) is a description of the type of company that gets the most value from your product and brings you the most value in return. A B2B ideal customer profile lists testable traits such as industry, size, location and a buying trigger, so sales and marketing know which accounts to pursue and which to skip.