Definition
NRR measures whether your existing customers, as a group, are paying you more or less than a year ago. It uses a fixed group, everyone paying at the start of the period, and ignores new customers acquired since. Also called net dollar retention (NDR).
Formula
Example
Twelve months ago Demo Co’s customers paid $200.0K a month. Since then they added $16.4K of expansion, lost $3.2K to contraction and $5.2K to churn. NRR = (200.0 + 16.4 − 3.2 − 5.2) ÷ 200.0 = 104%.
Benchmarks
Above 100% means the installed base grows on its own. For B2B SaaS, 100% to 110% is solid and 120%+ is excellent, more common with enterprise customers and usage-based pricing.
Common mistakes
- Including new customers in the numerator.
- Counting re-created subscriptions after a failed payment as churn. See failed payments aren’t churn.
- Mixing monthly and trailing-twelve-month calculations from one report to the next.
Examples use Demo Co, a fictional $3M ARR SaaS company, or a generic company where noted. Benchmarks are common reference points, not targets for every business.