Metrics & KPIs

Net Revenue Retention (NRR)

A measure of how much recurring revenue is retained from existing customers over time, including upsells, downgrades, and churn.

Definition

What is Net Revenue Retention?

Net Revenue Retention (NRR) measures how much recurring revenue a business retains from its existing customer base over a given period, factoring in expansions (upgrades, add-ons), contractions (downgrades), and churn (cancellations and failed payments). It is expressed as a percentage.

An NRR above 100% means the business is growing revenue from existing customers faster than it is losing it. An NRR below 100% means existing customer revenue is shrinking, even before accounting for new customer acquisition.

How to calculate NRR

NRR = (Starting MRR + Expansion MRR - Contraction MRR - Churned MRR) / Starting MRR × 100. For example, if you start a month with $100K MRR, gain $10K from upgrades, lose $3K to downgrades, and lose $7K to churn, your NRR is 100%.

Top-performing SaaS businesses typically achieve NRR of 110–130%, meaning their existing customer base alone generates revenue growth without any new sales.

The hidden drag of involuntary churn on NRR

Involuntary churn from failed payments directly reduces NRR by increasing the churned MRR component. Because these are customers who did not choose to leave, every dollar lost to payment failures is a dollar that could have stayed in the NRR calculation.

Improving payment recovery directly lifts NRR. By recovering payments that would otherwise churn, FlyCode reduces the churned MRR numerator and moves NRR closer to — or above — 100%.

Related Terms

→ Dunning

→ Chargeback

→ MRR (Monthly Recurring Revenue)

Frequently Asked Questions

What is a good NRR for a SaaS business?

Top-performing SaaS businesses typically achieve NRR of 110–130%. An NRR above 100% means your existing customer base is generating revenue growth on its own, without relying on new sales.

How does involuntary churn affect NRR?

Involuntary churn from failed payments increases the churned MRR component in the NRR formula, directly lowering the percentage. Since these customers did not choose to leave, this drag on NRR is entirely preventable.

How can I improve my NRR?

Focus on two levers: increase expansion revenue through upsells and add-ons, and reduce churned MRR by recovering failed payments. Payment recovery addresses the involuntary churn component that silently erodes NRR.