# Net Revenue Retention Rate

## What is Net Revenue Retention Rate?

Net Revenue Retention (NRR) Rate is the percentage of recurring revenue retained from existing customers in a defined time period, including expansion revenue, downgrades, and cancels. This churn metric gives a comprehensive view of positive as well as negative changes with respect to customer retention.

Alternate names: Net MRR Renewal Rate, Net Negative Churn Rate, Net Dollar Retention Rate

### How to calculate Net Revenue Retention Rate

ƒ Sum(RR (recurring revenue) at the beginning of the period + expansion RR during the period - downgraded RR during the period - cancelled RR during the period) / (RR at the beginning of the period)
ƒ Sum(renewing customers RR) / Sum(RR of customers due to renew)

### What is a good Net Revenue Retention Rate benchmark?

In a SaaS business, a Net Revenue Retention Rate >100% is a growth indicator. Across all SaaS companies, the median Net Retention Rate is ~100%. Higher Annual Contract Value (ACV) products have a higher Net Retention Rates. For SaaS companies selling into small and medium businesses (SMBs), a good Net Retention Rate is 90%. For Enterprise SaaS, 125% is considered a good Net Retention Rate.

### Example

Example A: A company has 100 customers, each paying \$2,000 per month. MRR at the beginning of the month is \$200,000. Within the month, 1 customer adds a \$4,000 MRR upgrade, 2 downgrade by \$500 each, and 1 customer cancels. NRR = = (\$200,000 + \$4,000 - (\$500 x 2) - \$2,000) / \$200,000 = \$201,000 / \$200,000 = 100.5% expressed monthly Example B: A company has 100 customers paying \$20,000 for annual subscriptions. Within a one month period, 10 customers are due for renewal, only 9 actually renew, 1 adds a \$5000 ARR upgrade, and 2 downgrade their subscription by \$2000 each. NRR = (\$20,000 x 9) + \$5,000 - (\$2,000 x 2)) / (\$2,000 MRR x 10) = \$19,000 / \$20,000 = 95.0% expressed monthly