What is NRR?
Net Revenue Retention
Net Revenue Retention (NRR) measures revenue growth from existing customers including expansions, minus churn. Above 100% means customers spend more over time.
NRR = (Starting MRR + Expansion - Churn - Contraction) ÷ Starting MRR × 100Top SaaS: 120%+ · Healthy: 105-120% · Concerning: 90-100% · Critical: <90%
- NRR
- Net Revenue Retention (NRR) measures revenue growth from existing customers including expansions, minus churn.
Why NRR matters
The single best predictor of SaaS valuation multiples. Companies with 120%+ NRR trade at 2-3x higher multiples. NRR above 100% means you can grow even without new customer acquisition.
Worked example
Plug a real number into the formula to see NRR in action:
Numbers are illustrative. Try our Customer LTV Calculator for your real numbers.
Common mistakes with NRR
- 1
Reporting MRR without separating new, expansion, contraction, churn. Net new MRR is the only number that matters for growth.
- 2
Counting trial signups as the conversion event. Activated trials (defined by an action) is the right gate.
- 3
Ignoring product-qualified leads. PQLs convert 3-5× higher than marketing-qualified leads.
How to improve NRR
Move from MQL to PQL definitions. PQLs convert 3-5× better and reduce sales waste.
Build an activation metric tied to value realization (e.g. "X events in 7 days"). Drive trial users to that bar.
Use NRR as the north-star: 110%+ NRR means the business compounds without acquiring new customers.
Common questions about NRR
What is NRR?▾
How is NRR calculated?▾
What is a good NRR benchmark?▾
Why does NRR matter for marketing teams?▾
Related terms
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