Net Dollar Retention (NDR)
The percentage of recurring revenue retained from existing customers after accounting for expansion, contraction, and churn. Above 100% means existing customers generate more revenue over time.
Also known as: NDR, net revenue retention, NRR
Formula
((Start MRR + Expansion - Contraction - Churn) / Start MRR) x 100
Why net dollar retention (NDR) matters
NDR is arguably the most important SaaS metric because it shows whether your product becomes more valuable to customers over time. An NDR above 100% means you could stop all new customer acquisition and still grow revenue.
Top-performing SaaS companies achieve 120-150% NDR, meaning their existing customer base generates 20-50% more revenue each year through upgrades, seat expansion, and cross-sells.
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How to calculate net dollar retention (NDR)
Start with the MRR from a cohort of customers at the beginning of a period. At the end, measure that same cohort's MRR including expansion and minus churn and contraction. Divide end MRR by start MRR.
Net Dollar Retention Calculator
((Start MRR + Expansion - Contraction - Churn) / Start MRR) x 100
What is a good net dollar retention (NDR)?
Best-in-class SaaS: 130-150%. Good: 110-130%. Acceptable: 100-110%. Below 100% means you are losing revenue from existing customers faster than you are growing it.
How to Track in Kissmetrics
Use Kissmetrics Revenue Reports to track MRR by customer cohort over time. The Cohort Report shows how revenue from each signup month evolves, directly visualizing your NDR.
Common Mistakes
- -Confusing net dollar retention with gross dollar retention (which excludes expansion)
- -Not measuring NDR by customer segment - your best segments may mask problems in others
- -Celebrating high NDR driven by price increases rather than genuine expansion
Pro Tips
- +Break NDR into components: what portion comes from seat growth, plan upgrades, and usage expansion
- +Track NDR by acquisition channel to understand which sources produce the most expandable customers
- +Use NDR trends to forecast future revenue more accurately than pipeline alone
Related Terms
Gross Revenue Retention
Gross Revenue Retention (GRR) measures the percentage of recurring revenue retained from existing customers, excluding any expansion revenue. It isolates the impact of downgrades and churn on your revenue base.
Expansion Revenue
Expansion revenue is additional recurring revenue generated from existing customers through upsells, cross-sells, seat additions, or increased usage. It is the primary driver of net revenue retention above 100%.
Churn Rate
The percentage of customers or revenue lost over a given period. Customer churn measures account losses; revenue churn measures dollar losses.
Monthly Recurring Revenue (MRR)
The predictable revenue a subscription business earns every month from all active subscriptions, normalized to a monthly amount.
Further Reading
Net Revenue Retention: The Most Important SaaS Metric Investors Look At
Net revenue retention measures expansion minus churn on an existing cohort. The NRR formula, what counts as good, and the two mistakes that overstate it.
Product-Led Growth: Strategies, Metrics, and the PLG Flywheel
How the product-led growth flywheel works, PLG vs sales-led, and the five metrics that keep it turning, from activation rate and time-to-value to NRR.
The Customer Lifecycle: A Framework for Tracking What Actually Matters
A five-stage customer lifecycle framework, aware to passionate, with the metric that shows whether each stage works and how to track movement between them.
The SaaS Customer Lifecycle: Steps Most Businesses Forget to Track
The SaaS customer lifecycle from first visit to advocacy, the metric to track at each stage, and the steps most teams forget to measure.
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