Definitions
What NRR means and how to calculate it
NRR (net revenue retention) explained with the exact formula, a worked example, and the benchmark ranges investors use to judge SaaS companies.
- 3 August 2026
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What does NRR mean and how is it calculated?
NRR (net revenue retention) measures revenue change from your existing customer base over a period, including upgrades, downgrades and cancellations, but excluding new customers. It's calculated as (starting revenue + expansion − downgrades − churn) ÷ starting revenue. Above 100% means existing customers are growing revenue even with zero new sales; 100–110% is solid, above 120% is excellent for B2B SaaS.
Last updated 3 August 2026
| NRR range | What it means | Typical stage |
|---|---|---|
| Below 90% | Losing revenue from existing base faster than it expands | Warning sign at any stage |
| 90–100% | Roughly flat; growth depends entirely on new sales | Common early-stage |
| 100–110% | Existing base growing modestly on its own | Solid, fundable |
| 110–120% | Strong expansion motion | Good Series B+ benchmark |
| Above 120% | Excellent, expansion-led growth | Top-quartile SaaS |
Do this
The steps, in order.
- Step 1
Pick a starting cohort and period
Take the revenue from all customers active at the start of, say, the year (excluding any customer who joins during the period). Everything is measured against this fixed group.
- Step 2
Add expansion revenue from that same cohort
Upsells, seat additions, plan upgrades — any extra revenue from customers who were already in the starting cohort.
- Step 3
Subtract downgrades and cancellations from that same cohort
Any customer from the starting cohort who reduced their plan or cancelled entirely during the period.
- Step 4
Divide by the starting revenue and multiply by 100
(Starting revenue + expansion − downgrades − churn) ÷ starting revenue × 100 = NRR percentage.
- Step 5
Never include new customer revenue in the calculation
Adding new logos to the numerator is the most common NRR calculation error and inflates the figure — NRR by definition only tracks the existing base.
Worth knowing
The bits people get wrong.
A worked example: start the year with $1,000,000 in revenue from existing customers. Over the year, $150,000 comes from expansion (upsells and upgrades), $50,000 is lost to downgrades, and $100,000 is lost to churned customers. NRR = ($1,000,000 + $150,000 − $50,000 − $100,000) ÷ $1,000,000 = 100%. Flat: expansion exactly offset losses.
NRR matters more to investors than logo retention alone because it captures the economics of the existing base directly. A company can have relatively high logo churn but still post excellent NRR if the customers who stay expand significantly — common in usage-based pricing models.
The distinction from gross revenue retention (GRR) matters: GRR caps at 100% and only measures downgrades and churn, ignoring expansion. NRR can exceed 100%. Quoting NRR without mentioning GRR can make a business with high churn but even higher expansion look healthier than it is — check both together.
NRR is typically calculated monthly and annualised, or measured directly over a trailing 12 months. Trailing 12-month NRR smooths out seasonal effects and single large deals that can distort a single month's figure.
Questions
Follow-up questions.
What's a good NRR for an early-stage startup?
Above 100% is a good early signal; many early-stage B2B SaaS companies sit between 90-105% before expansion motions (upsells, seat growth) are built out deliberately.
Is NRR the same as net dollar retention (NDR)?
Yes, they're the same metric under two different names, both common in SaaS reporting and investor decks. Use whichever term your audience uses.
Can NRR be above 150%?
Yes, in usage-based or seat-based pricing models with strong expansion, some companies post NRR of 130-150%+, though this is rare and usually specific to a particular pricing model.
How often should NRR be reported to a board or investors?
Quarterly, alongside gross revenue retention and logo churn, so the full retention picture is visible rather than one flattering number in isolation.
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