Net Dollar Retention (NDR)

What is Net Dollar Retention (NDR)?

Net Dollar Retention (NDR), also called Net Revenue Retention (NRR), is a SaaS metric that measures how recurring revenue from existing customers changes over a specific period, accounting for expansion, downgrades, and churn.

How to Calculate Net Dollar Retention (NDR)?

You can calculate NDR by taking the starting MRR/ARR from existing customers, adjusting for expansions, contractions, and churn, and dividing it by the starting MRR/ARR.

Steps to Calculate Net Dollar Retention (NDR)

• Step 1 – Identify starting MRR/ARR (from existing customers only. Exclude new customers acquired during the period).
• Step 2 – Add expansion MRR/ARR (revenue gained from upsells, cross-sells, or usage increases).
• Step 3 – Subtract contraction MRR/ARR (revenue lost from downgrades or reduced usage).
• Step 4 – Subtract churned MRR/ARR
• Step 5 – Divide Net Revenue (after adjustments) by the Starting Revenue.
• Step 6 – Convert to percentage (multiply by 100 for reporting).

Formula to Calculate Net Dollar Retention (NDR)

NDR (%) = (Starting MRR + Expansion MRR – Contraction MRR – Churned MRR ) ÷ Starting MRR ×100

Benchmark for Net Dollar Retention (NDR)

• 100% NDR: You’ve retained all existing revenue, but no expansion.
• <100% NDR: Net revenue shrinkage; churn/contraction outweighs expansion.
• 100-120% NDR: Solid; common in healthy SaaS businesses.
• 120-150% NDR: Best-in-class; indicates strong expansion and upsell motion (often seen in enterprise SaaS).

Related Metrics for Net Dollar Retention (NDR)

• Gross Revenue Retention (GRR)
• Customer Retention Rate (CRR)
• Expansion MRR/ARR
• Churn Rate
• Customer Lifetime Value (LTV)