Business Term
NRR
Net Revenue Retention
NRR
NRR shows how much revenue remains from existing customers after churn, contraction, and expansion.
Formula
NRR = (starting existing MRR + expansion - contraction - churn) / starting existing MRR
Use when
Use it to judge existing-customer strength, PMF, and customer success investment.
Watch out
Starting customers, expansion, contraction, churn
Updated: 06/27/2026Quality: ReviewedSources: 1
What it means
NRR measures revenue retention within the existing customer base including expansion. Above 100% means expansion outweighs churn and contraction.
How to calculate it
| Lens | Formula / treatment | When to use it |
|---|---|---|
| Basic formula | NRR = (starting existing MRR + expansion - contraction - churn) / starting existing MRR | Measures net existing-customer retention |
What counts / what does not
| Item | Treatment | Why it matters |
|---|---|---|
| Include | Starting customers, expansion, contraction, churn | They measure net existing-customer change |
| Exclude | New customer revenue | It separates retention from acquisition |
What moves the number
| Driver | Metric impact | What to watch |
|---|---|---|
| Expansion | Upsell and cross-sell | Drives NRR above 100% |
| Churn / Contraction | Cancellation and downgrade | Shows leakage |
When it helps
- Use it to judge existing-customer strength, PMF, and customer success investment.
How to use it
- Exclude new customers and track the same cohort's MRR over the period.
Decision cautions
- High NRR does not explain total growth if acquisition or market expansion is weak.
Example
Example: starting MRR 10m, expansion 1.5m, contraction 0.5m, churn 1m gives 100% NRR.
Compare with
| Metric | Difference | Why read together |
|---|---|---|
| GRR | Retention without expansion | NRR includes expansion |
Common mistakes
- Mixing in new revenue overstates existing-customer retention.
Frequently asked questions
Is NRR above 100% good?
Usually yes, but check whether it depends on a few large accounts.
Sources
| Sources | Kind | Link |
|---|---|---|
| YogoQ Core business foundation editorial baseline | editorial | — |