Net Revenue Retention (NRR): Formula and Worked Example
Summary
NRR = (Starting MRR + Expansion − Contraction − Churned MRR) ÷ Starting MRR × 100, measured on the customers you had at the start. New customers are excluded. A cohort that started at $420,000 MRR and ended at $434,700 a year later has an NRR of 103.5%.
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Net revenue retention (NRR) formula
NRR % = (Starting MRR + Expansion MRR − Contraction MRR − Churned MRR) ÷ Starting MRR × 100- Starting MRR: Recurring revenue from customers active at the start of the measurement window, usually 12 months ago.
- Expansion MRR: Added recurring revenue from those same customers: upgrades, extra seats, add-ons, price increases.
- Contraction MRR: Recurring revenue lost to downgrades or fewer seats among customers who stayed.
- Churned MRR: Recurring revenue from starting customers who cancelled completely.
How to calculate net revenue retention (NRR) in Excel and Google Sheets
Excel, using the cells in the worked example below:
=SUM(B2:B5)/B2Worked example
A customer-support software company measures 12-month NRR for all customers active on October 1, 2025. Contraction and churn are entered as negative numbers.
| Component | MRR |
|---|---|
| Starting MRR (Oct 1, 2025) | $420,000 |
| Expansion | $71,400 |
| Contraction | -$18,900 |
| Churned | -$37,800 |
- Ending MRR from the starting customers = 420,000 + 71,400 − 18,900 − 37,800 = $434,700.
- NRR = 434,700 ÷ 420,000 = 103.5%.
- Gross revenue retention (no expansion) = (420,000 − 18,900 − 37,800) ÷ 420,000 = 86.5%. In Excel: =SUM(B2,B4:B5)/B2.
- Reading: the existing base grew 3.5% on its own, but 13.5% of starting revenue leaked out through downgrades and cancellations and had to be replaced by upgrades.
Result: 103.5% net revenue retention (86.5% gross revenue retention)
How to interpret net revenue retention (NRR)
NRR above 100% means the existing customer base grows revenue even with zero new sales, which is why investors weigh it heavily. Typical levels depend on who you sell to: products for small businesses often see NRR below 100% because small customers churn more, while enterprise and usage-based products more often run above it. Always pair NRR with gross revenue retention: a high NRR built on a few big upgrades can hide a churn problem that GRR, which caps at 100%, exposes.
Common mistakes
- Including revenue from customers acquired during the window. NRR only covers the starting cohort.
- Measuring over a single month and calling it annual. Monthly NRR compounds; report trailing 12-month NRR or say it's monthly.
- Counting one-time fees or usage spikes as expansion.
- Reporting only NRR. Always show gross revenue retention next to it.
Calculate net revenue retention (NRR) with Better Analyst
Connect your data or upload a spreadsheet, then ask in plain English. Better Analyst writes and runs the calculation and shows the steps, so you can check the number.
- “Calculate trailing 12-month NRR and GRR each month from our subscriptions history.”
- “Break down expansion, contraction and churned MRR by plan for the last year.”
- “Which customer segment has the lowest gross revenue retention?”
Usually calculated from: PostgreSQL, Google BigQuery, Snowflake, Supabase, 
Microsoft SQL Server, Google Sheets.
Further reading
Frequently asked questions
What is the difference between NRR and GRR?
Is NRR the same as net dollar retention?
How do I calculate NRR in Excel?
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