What Is Net Revenue Retention (NRR)?
Net Revenue Retention tells you whether your existing customer base is growing or shrinking in revenue terms. An NRR above 100% is the hallmark of a high-quality subscription business.
Key Takeaways
- NRR = (Starting MRR + Expansion − Churn − Contraction) ÷ Starting MRR × 100
- NRR above 100% means your existing customers are growing your revenue even without new sales
- Best-in-class SaaS businesses have NRR of 120%+ — meaning each cohort expands significantly over time
- NRR is the single metric most correlated with high SaaS valuation multiples
The formula
Net Revenue Retention = (MRR at start of period + Expansion MRR − Churned MRR − Contraction MRR) ÷ MRR at start of period × 100. Use a 12-month window for the most meaningful view. If you started the year with £100,000 MRR, generated £25,000 in expansion MRR from upsells, and lost £10,000 in churned MRR and £5,000 in contraction, your NRR is (100,000 + 25,000 − 10,000 − 5,000) ÷ 100,000 × 100 = 110%.
Why above 100% is the milestone
An NRR above 100% means that even if you acquired zero new customers, your revenue would still grow — because existing customers are expanding faster than others are churning. This is sometimes called negative churn. It fundamentally changes the economics of growth: new customer acquisition adds on top of an already-growing base, rather than simply replacing lost revenue.
What drives high NRR
The key driver is a product that delivers more value as usage grows — usage-based pricing, seat-based pricing, or a natural upsell ladder are all structures that generate expansion MRR. Slack, Salesforce, and HubSpot all have NRR above 100% because customers naturally grow into larger tiers. For SME software businesses, the levers are: adding a higher-tier plan with more features, introducing usage-based add-ons, and creating a customer success motion that identifies expansion opportunities before customers even ask.
NRR benchmarks
SaaS businesses targeting SMBs typically achieve NRR of 90–105%. Mid-market and enterprise SaaS can achieve 110–130%+. Best-in-class businesses (think Snowflake, which has consistently had NRR above 150%) have products whose usage — and therefore revenue — scales with the customer's own growth. Below 90% NRR is a warning: the business is shrinking in its existing customer base, which makes growth extremely expensive.