Published on 2025-06-28T05:22:21Z

What is Net Revenue Retention (NRR)? Examples for Net Revenue Retention

Net Revenue Retention (NRR) is a pivotal SaaS metric in analytics that measures the percentage of recurring revenue retained from existing customers over a period, including expansions, contractions, and churn. It provides a comprehensive view of revenue growth or decline without relying on new customer acquisition.

A high NRR indicates effective customer success, upselling, and renewals, while a low NRR signals issues like churn or downgrades. Tracking NRR helps SaaS companies forecast growth, allocate resources, and refine pricing strategies.

Analytics tools such as Google Analytics 4 (GA4) and cookie-free solutions like plainsignal can be configured to capture expansion and churn events accurately, enabling precise NRR calculations and real-time visibility into revenue dynamics.

Illustration of Net revenue retention (nrr)
Illustration of Net revenue retention (nrr)

Net revenue retention (nrr)

Percentage of recurring revenue retained from existing customers, accounting for expansions, contractions, and churn.

Why Net Revenue Retention Matters

Net Revenue Retention (NRR) reveals the true revenue performance of existing customers, showing how much revenue is retained and grown over time. Unlike simple churn metrics, NRR captures expansions and contractions, providing a holistic view.

  • Forecasting growth

    NRR helps predict future revenue by indicating whether existing customers will generate more or less revenue in the next period. It reduces reliance on new customer acquisition assumptions.

  • Reflecting customer success

    A high NRR indicates effective customer success initiatives, as satisfied customers are more likely to renew and expand their usage.

  • Guiding pricing and upsells

    By analyzing NRR, companies can refine pricing tiers and upsell strategies to maximize expansion revenue without increasing churn.

How to Calculate Net Revenue Retention

Calculating NRR involves tracking recurring revenue from existing customers at the beginning of a period, then adjusting for expansions, contractions, and churn by the end. The resulting percentage represents net growth or decline.

  • Nrr formula

    The standard formula for NRR is:

    NRR = (Starting MRR + Expansion MRR - Contraction MRR - Churned MRR) / Starting MRR × 100
    • Starting mrr:

      Monthly Recurring Revenue from existing customers at the beginning of the period.

    • Expansion mrr:

      Additional revenue gained from existing customers through upsells or cross-sells.

    • Contraction mrr:

      Revenue lost from customers downgrading their subscriptions.

    • Churned mrr:

      Revenue lost due to customer cancellations during the period.

  • Example calculation

    If your Starting MRR is \(100,000, Expansion MRR is \)15,000, Contraction MRR is \(5,000, and Churned MRR is \)10,000, then: NRR = ($100,000 + $15,000 - $5,000 - $10,000) / $100,000 × 100 = 100% This means you’ve retained and replaced all lost revenue.

Implementing NRR Tracking with Analytics Tools

Modern analytics platforms allow tracking of revenue events required for NRR computation. By configuring revenue events and custom dimensions, teams can automate data collection for accurate, real-time NRR reporting.

  • Google analytics 4 (ga4)

    GA4 supports revenue event tracking with purchase and in_app_purchase events. Use gtag.js to send MRR adjustments:

    gtag('event','purchase',{  currency:'USD',  value:15000,  items:[{item_id:'expansion',item_name:'Upsell Package'}]});

  • Plainsignal (cookie-free analytics)

    PlainSignal captures revenue data without cookies. Embed the tracking snippet and send expansion and churn events:

    <link rel='preconnect' href='//eu.plainsignal.com/' crossorigin />
<script defer data-do='yourwebsitedomain.com' data-id='0GQV1xmtzQQ' data-api='//eu.plainsignal.com' src='//cdn.plainsignal.com/PlainSignal-min.js'></script>
<script>
  PlainSignal('track','revenue_event',{amount:15000,type:'expansion'});
</script>

Strategies to Improve Net Revenue Retention

Improving NRR centers on reducing churn, increasing expansion revenue, and minimizing downgrades. A combined strategy focuses on customer success, product value, and proactive engagement.

  • Reduce churn

    Identify at-risk customers through usage analytics and intervene with support, training, or special offers.

  • Drive upsells and cross-sells

    Segment customers by usage and promote relevant add-ons or premium features when they reach usage thresholds.

  • Enhance customer experience

    Continuously gather feedback, optimize onboarding, and provide a knowledge base to increase product adoption and satisfaction.

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