Net revenue retention shows whether your existing customers are worth more or less than before.

It matters because above 100% the business grows before it makes a new sale.

NRR looks only at customers you already had. Above 100%, they pay more now than they did at the start, so revenue grows even in a period with no new customers. Below 100%, new sales first have to fill the gap before they add anything.

That makes it one of the clearest signs of whether customers keep getting value. It is also called net dollar retention.

Start with last period's MRR, add expansion, subtract losses and divide by where you started.

NRR = (starting MRR + expansion − contraction − churned) ÷ starting MRR × 100
GRR = (starting MRR − contraction − churned) ÷ starting MRR × 100

Fix the group first: every customer who was paying on the first day of the period, and nobody who joined after it. NRR is most often quoted over 12 months.

Count MRR, not cash. A customer on an annual plan counts as one twelfth of the yearly price at both ends of the comparison, whenever the invoice was paid.

Gross revenue retention is the same sum without the expansion.

GRR counts only what you kept, so it can never be above 100%. Read the two together.

In the example, NRR is 105% and GRR is 87%. Upgrades are covering 13 points of losses. If expansion slows down, those losses show at once, so a healthy NRR built on a weak GRR is less safe than it looks.

You raise it by losing less first and expanding more second.

• Fix gross retention before chasing expansion. Revenue you keep needs no new work next year. Revenue you replace through upgrades has to be won again.
• Collect the payments that fail. A subscription lost to a declined card counts against NRR like any cancellation. See involuntary churn.
• Give accounts a way to grow. Seats, volume tiers and add-ons are where expansion MRR comes from.
• Watch the largest accounts. One large cancellation can move NRR more than a hundred small ones.

These mistakes inflate NRR.

• Including new customers. Revenue from customers won during the period is new business, not retention.
• Choosing a flattering group. Leaving out small accounts or early cancellations lifts the number. Say exactly which customers are in.
• Mixing monthly and yearly figures. A monthly NRR of 101% compounds to about 112.7% over 12 months. Always name the period.
• Quoting NRR without GRR. The gap between the two is how much of your retention depends on upgrades.