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What is NRR

Full name: Net Revenue Retention

Also known as: net revenue retention, net dollar retention, NDR, GRR, gross revenue retention, how to calculate NRR

Definition

NRR (net revenue retention) is the share of last year's recurring revenue the same customers pay now, upgrades and cancellations included. Over 100% is growth.

Why it matters

NRR shows whether the business can grow without a single new customer.

Common mistakes

Adding the revenue of customers who joined during the period to NRR.

Related terms

Worked exampleIllustration

A bookkeeping office's retainer clients a year later

Retainer sheet, January against December

  • January clients, monthly retainers in January₪20,000
  • Added payroll services+₪3,000
  • Cut services-₪800
  • Clients who left-₪1,600
  • The same clients in December₪20,600
  • New clients signed during the year, not counted

Steps

  1. On 1 January the existing retainer clients pay, together, per month:₪20,000

  2. Some of them add payroll services.+₪3,000

  3. Some cut services.-₪800

  4. Some leave.-₪1,600

  5. The same clients now pay ₪20,600 a month. NRR = 20,600 ÷ 20,000.103%

  6. GRR leaves the added services out: (20,000 - 800 - 1,600) ÷ 20,000.88%

  7. Clients signed during the year are counted in neither number.

The office grew 3% from existing clients alone, but 12% of the base leaked and the added services covered it.

Illustration

The same clients, a year later

  1. January clients, monthly retainers in January₪20,000
  2. Added services+₪3,000
  3. Cut services-₪800
  4. Clients who left-₪1,600
  5. The same clients in December₪20,600

100%: what the same clients paid in January

The same clients now pay ₪20,600 a month against ₪20,000: NRR 103%. Without the added services, GRR is 88%. Above 100%, the existing base grows on its own.

Only the clients the office had in January, a year on. Clients signed during the year are not in this picture.

Above or below 100%, year after year

The office's January revenue of ₪20,000 if this year's rates repeat: with the added services (103% a year) and without them (88%). Arithmetic, not a forecast.Start: ₪20,000₪21,855₪13,629Year 0Year 1Year 2Year 3
  • NRR 103%
  • GRR 88%, without the added services
The office's January revenue of ₪20,000 if this year's rates repeat: with the added services (103% a year) and without them (88%). Arithmetic, not a forecast.

Definition

NRR, short for net revenue retention, takes the recurring revenue a group of existing customers paid at the start of a period, usually twelve months, and asks how much the same customers pay at its end. Upgrades and added services raise it, downgrades and cancellations lower it, and customers who joined during the period are left out. ChartMogul also counts reactivations, customers who left and came back, by default, and some teams exclude them. Above 100%, the existing customers pay more in total than before, which is also called net negative churn. Its stricter partner, GRR (gross revenue retention), leaves expansion out: starting MRR minus contraction and churn, divided by starting MRR, so GRR can never pass 100%. NRR and NDR (net dollar retention) are the same metric under two names.

Why it matters

Above 100%, the customers you already have pay more each year, a sign that they find more value over time. Below 100%, every year starts with a hole that new sales must fill first. Read it next to GRR, because a healthy NRR can hide many losses covered by upgrades from a few customers.

Directly related: MRR, ARR, Churn.

Formula

NRR = ((Starting MRR + Expansion MRR - Downgrade MRR - Churn MRR) / Starting MRR) * 100

Improvement tips

  • Measure NRR on the same group of customers over twelve months, and report GRR next to it.
  • Give existing customers a clear next step: a higher plan, an added service, a yearly review of what they use.
  • Watch customers whose use is falling, and call them before they cut back or cancel.
  • Split NRR by customer type or size. One average can hide a group that is leaving.

Common mistakes

  • Never stating the period, so this year's figure cannot be compared with last year's.
  • Reporting NRR without GRR, so a few large upgrades hide many losses.
  • Reading NRR above 100% as proof of product market fit, when a price rise alone can produce it.

Related terms

FinanceIntermediate

MRR

MRR (monthly recurring revenue) is what active subscriptions and retainers are worth per month, without one off fees. 40 members at ₪350 is ₪14,000 MRR.

FinanceIntermediate

ARR

ARR (annual recurring revenue) is the yearly value of the recurring subscriptions and contracts active today, usually MRR × 12. A snapshot, not a forecast.

FinanceIntermediate

Churn

Churn is the share of customers, or of recurring revenue, lost in a period: those who left in a month divided by those at its start. 5% a month is 46% a year.

FinanceIntermediate

LTV

LTV (customer lifetime value) is the gross profit one customer brings over the whole relationship. You compare it with the cost of winning that customer (CAC).

TechnologyBeginner

SaaS

SaaS (Software as a Service) is software you rent by subscription and use in a browser or an app, with nothing to install. The vendor hosts and updates it.

StartupsIntermediate

Product-Market Fit

Product-market fit is when a product satisfies a real market so well that customers stay, come back and bring others without being pushed.

Quick check

A year ago a group of customers paid ₪20,000 a month. The same customers now pay ₪20,600, and new customers add ₪5,000. What is NRR?

Choose an answer

Frequently asked questions

Do I need to understand NRR before starting a subscription business?
It helps to know it exists. In the first year no group of customers is old enough to measure, but an upgrade path designed from day one is what lifts NRR later.
When does NRR first become relevant for a new business?
Once you have customers who have been with you for a full year, the usual period. Until then, watch monthly churn and upgrades.
How does NRR differ from GRR?
GRR counts only what existing customers kept paying after downgrades and cancellations, so it cannot pass 100%. NRR adds their upgrades too. The gap between the two shows how much the upgrades are covering losses.
What is a good NRR?
Above 100%, your existing customers alone grow the business, and below 100% they shrink it. Published benchmarks come mostly from large software companies that sell to other businesses, so compare yourself with your own last year first.
Why does NRR matter for a business already running?
It shows whether the customers you already have are a growing asset or a leaking one. At 110%, a business grows 10% a year before it signs anyone new.
What goes wrong when a business ignores its NRR?
Strong new sales can hide a base that shrinks every year. When sales slow down, revenue drops suddenly and nobody saw it coming.
How do I calculate NRR without stopping day to day work?
List the customers you had twelve months ago and what they paid then. Next to it, write what the same customers pay today, and divide the new total by the old one. A billing tool does it for you, and a spreadsheet is enough for a few dozen clients.
How can a subscription business improve its NRR?
Give existing customers a reason to pay more, such as a higher plan, an added service or a yearly review of their needs, and reach customers whose use is falling before they cut back.
What does NRR mean in plain words?
Out of every ₪100 your existing customers paid a year ago, NRR says how many shekels the same customers pay today, after upgrades, downgrades and cancellations.
Is NRR complicated to calculate?
The arithmetic is one division. The care is in the list: the same customers at both ends, the same period every year, and no new customers mixed in.
Do I need an accountant to calculate NRR?
No. It is a management metric that comes from your client list and your billing, not from the books.
What does an NRR above 100% mean?
The upgrades and added services of existing customers brought in more than downgrades and cancellations took away. Check GRR as well, because the same result can come from a few large customers or from a price rise.

Sources: ChartMogul, Net Revenue Retention (NRR), chartmogul.com, read September 2026, ChartMogul, Gross Revenue Retention (GRR), chartmogul.com, read September 2026

Last reviewed: 2026-09-23

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