Subscription metrics
Net revenue retention calculator
Net revenue retention is what last year's customers are worth this year. Above 100% means the business grows without selling to anybody new.
Upgrades, extra seats and add-ons from existing customers.
Downgrades from customers who stayed.
Net revenue retention
101.6%
- Gross revenue retention
- 93.2%
- Expansion excluded. Never above 100%.
- Ending MRR from this cohort
- $50,800
NRR = (starting MRR + expansion − contraction − churn) ÷ starting MRR
New customers are deliberately excluded
Net revenue retention measures one cohort over time. Adding new customers to the numerator would let a good sales quarter hide a leaking product, which is exactly what the metric exists to prevent.
That is why it is the number investors ask for. Growth can be bought; retention cannot.
Above 100% is the whole point
If expansion from existing customers outweighs what downgrades and cancellations took away, NRR goes above 100% and the business grows without selling to anybody new. That is sometimes called negative churn.
It requires a product where customers naturally use more over time: more seats, more usage, more features. A flat single-price product essentially cannot get there, and that is a pricing decision rather than a retention failure.
Read it with gross revenue retention
Gross revenue retention excludes expansion, so it can never exceed 100%. It is the honest floor: what you keep before any upsell.
The gap between the two tells you where your growth comes from. NRR at 110% with GRR at 85% means a lot of expansion papering over a lot of churn, which is a very different business from NRR at 110% with GRR at 97%, even though the headline is identical.
Pick a period and keep it
NRR is usually quoted annually, comparing a cohort to itself twelve months later. Monthly NRR is also used and is a much smaller number for the same business, because there has been less time for expansion.
The two are not comparable. Label which one you are reporting, because a monthly figure quoted as if it were annual understates a business badly.
Questions
- How do you calculate net revenue retention?
- Take starting MRR, add expansion, subtract contraction and churned MRR, then divide by starting MRR. New customers are excluded on purpose, because the metric measures one cohort over time.
- What is a good net revenue retention rate?
- Above 100% means existing customers alone grow the business. Many strong business-to-business products sit between 110% and 130%. Products sold to consumers or small businesses rarely exceed 100% because there is less room to expand an account.
- What is the difference between NRR and gross revenue retention?
- Gross revenue retention excludes expansion, so it can never exceed 100%. The gap between the two shows how much expansion is covering churn: NRR of 110% with GRR of 85% is a very different business from NRR of 110% with GRR of 97%.
- Why are new customers excluded from NRR?
- Because including them would let a good sales quarter hide a leaking product. NRR measures what one cohort is worth over time, which is why growth can be bought and retention cannot.
- Is NRR measured monthly or annually?
- Usually annually, comparing a cohort to itself twelve months later. Monthly NRR is also used and is a much smaller number for the same business, because there has been less time for expansion. The two are not comparable, so label which one you mean.