Method and assumptions
NRR excludes new customers and isolates what happens to the starting revenue cohort. It is most useful when the cohort and period are consistent.
NRR = (starting MRR + expansion - contraction - churn) ÷ starting MRR.
Worked scenario
Freeze opening MRR for a customer cohort and track expansion, contraction and churn from those same customers. Exclude all new-customer MRR. Calculate gross retention before expansion and net retention after expansion, then segment results by plan, account size and tenure.
How to interpret the result
NRR above 100% means expansion from retained customers exceeded contraction and churn, but it can coexist with severe logo churn or concentration. Gross revenue retention shows the downside before upsell. Review both metrics and the distribution of expansion rather than relying on the company average.
Input reference
- Currency
- Example default: USD
- Starting cohort MRR
- Example default: 100000
- Expansion MRR
- Example default: 12000
- Contraction MRR
- Example default: 4000
- Churned MRR
- Example default: 7000
Common mistakes
- Adding new-customer MRR to the retention numerator.
- Changing the opening cohort during the period.
- Letting one large expansion mask broad contraction.
Before using the result
- Lock the opening customer and MRR population.
- Report GRR, NRR and logo retention together.
- Inspect expansion concentration and cohort distribution.
Questions to check before deciding
Does NRR include new customers?
No. Excluding new sales makes NRR a measure of existing customer expansion and retention.
Can NRR exceed 100%?
Yes. Expansion from existing customers can exceed contraction and churn.
Independent planning calculator. Not financial, tax, legal or investment advice.