# Net Revenue Retention (NRR): Formula and Worked Example

- URL: https://betteranalyst.com/metrics/net-revenue-retention
- Published: 2026-11-01
- Updated: 2026-11-01
- Author: David Bressler, Founder (https://betteranalyst.com/authors/david-bressler)

> **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%.

Category: [SaaS](https://betteranalyst.com/metrics#saas)

Net revenue retention formula with expansion, contraction and churn, a 12-month SaaS example, the Excel formula, and how NRR differs from GRR.

## 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)/B2
```

## Worked 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.

*12-month MRR movements for the Oct 1, 2025 customer base (table starts in cell A1)*

| Component | MRR |
| --- | --- |
| Starting MRR (Oct 1, 2025) | $420,000 |
| Expansion | $71,400 |
| Contraction | -$18,900 |
| Churned | -$37,800 |

1. Ending MRR from the starting customers = 420,000 + 71,400 − 18,900 − 37,800 = $434,700.
2. NRR = 434,700 ÷ 420,000 = 103.5%.
3. Gross revenue retention (no expansion) = (420,000 − 18,900 − 37,800) ÷ 420,000 = 86.5%. In Excel: =SUM(B2,B4:B5)/B2.
4. 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](https://betteranalyst.com/data-connectors/postgresql), [Google BigQuery](https://betteranalyst.com/data-connectors/bigquery), [Snowflake](https://betteranalyst.com/data-connectors/snowflake), [Supabase](https://betteranalyst.com/data-connectors/supabase), [Microsoft SQL Server](https://betteranalyst.com/data-connectors/mssql), [Google Sheets](https://betteranalyst.com/data-connectors/google-sheets).

[Try Better Analyst free](https://betteranalyst.com/signup)

## Further reading

- [How to calculate churn rate](https://betteranalyst.com/metrics/churn-rate)
- [How to calculate ARR](https://betteranalyst.com/metrics/annual-recurring-revenue)
- [Connect BigQuery](https://betteranalyst.com/data-connectors/bigquery)
- [Build a revenue waterfall chart](https://betteranalyst.com/blog/how-to-build-a-revenue-waterfall-chart-in-excel)

## Frequently asked questions

### What is the difference between NRR and GRR?

NRR includes expansion revenue from existing customers; GRR excludes it and can never exceed 100%. In the example NRR is 103.5% and GRR is 86.5%.

### Is NRR the same as net dollar retention?

Yes. Net revenue retention (NRR) and net dollar retention (NDR) are the same metric under different names.

### How do I calculate NRR in Excel?

Enter starting MRR, expansion, and contraction and churn as negative values in one column, then divide the sum by the starting value: =SUM(B2:B5)/B2.

## Related metrics

- [How to Calculate Churn Rate: Formula, Excel and Annualizing](https://betteranalyst.com/metrics/churn-rate)
- [How to Calculate ARR: Annual Recurring Revenue Formula](https://betteranalyst.com/metrics/annual-recurring-revenue)
- [Rule of 40: Formula, SaaS Example and How to Calculate It](https://betteranalyst.com/metrics/rule-of-40)
- [Customer Lifetime Value Formula: How to Calculate CLV](https://betteranalyst.com/metrics/customer-lifetime-value)