Net revenue retention
What last year's customers are worth this year, before any new customers are counted.
01 What it is
Why anyone looks at this number
What last year's customers are worth this year, before any new customers are counted.
Above 100% the base grows on its own, which is the strongest position a business can be in. Below it, every new sale is partly refilling a leaking bucket.
02 The formula
How it is worked out
Net revenue retention = (starting_revenue + expansion − contraction − churn) ÷ starting_revenue grain : cohort × quarter unit : percentage source : Billing and contract records
Fix the cohort at the start of the period and follow only those customers. Letting new customers into the calculation turns it into a growth rate and hides churn entirely.
03 Worked example
The same number, with real inputs
| Starting base | €20.0m |
| Expansion | €3.2m |
| Contraction | €0.9m |
| Churn | €1.5m |
| Calculation | (20.0 + 3.2 − 0.9 − 1.5) ÷ 20.0 |
| Result | 104% |
The base grows without a single new logo. Note the €2.4m of contraction and churn underneath — healthy net numbers can hide an unhealthy gross picture.
04 What moves it
Four things that actually change this number
Churn
Customers leaving outright.
Contraction
Customers staying but spending less — usually the earlier warning.
Expansion
More seats, more volume, more products.
Price increases
Legitimate expansion, but worth reporting separately from usage growth.
05 Where the number lives
The system, the record and the fields
| System of record | Key record | Fields you need |
|---|---|---|
| Billing and contract records | Subscription / Contract line by customer cohort | recurring_revenue, start_date, end_date, upgrade, downgrade, cancellation |
Fix the cohort at the start of the period and follow only those customers. Letting new customers into the calculation turns it into a growth rate and hides churn entirely.
06 How it goes wrong
Three ways this metric misleads people
Reporting net only
Expansion masks churn, so a rising NRR can hide a worsening retention problem.
Fix: Always show gross retention next to it.Including new customers
It becomes a growth rate and stops measuring retention at all.
Fix: Freeze the cohort at period start.Ignoring price rises
An across-the-board increase lifts NRR without anyone using more of the product.
Fix: Split expansion into price and volume.08 Questions
Frequently asked
What is the difference between gross and net retention?
Gross retention counts only losses and cannot exceed 100%. Net retention adds expansion back in, so it can. You need both: net shows the trajectory, gross shows the leak.
Does NRR apply outside subscriptions?
Yes. Any business with repeat customers can measure what last year's customers spent this year. It is often more revealing in distribution and manufacturing, where nobody usually looks.
One definition, everywhere it is used
SCIKIQ stores this metric once and serves it to every dashboard, board pack and agent that asks.