Why net retention rate is one of your most important metrics
Net retention rate (NRR) shows how much revenue you keep and grow from your existing customers over time. It captures everything that happens after the initial sale: upgrades, downgrades, and churn.
How it works:
- Start with last year’s revenue from the same customer group
- Add expansion (upsells, cross-sells, price increases)
- Subtract contraction
- Subtract churn
- Divide by the original number
What the number tells you:
- 100% → you kept every $
- >100% → your customers expanded (top-tier SaaS performance)
- <100% → you’re leaking revenue even if logo churn looks stable
If you run a subscription business, NRR is a metric you must track closely. It reveals whether customers get increasing value from your product and whether your growth is sustainable — not just driven by new sales.
