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What is NRR in SaaS?

Mar 24 • 1 min read

Knowledge Base > SaaS > What is NRR in SaaS?

In SaaS, NRR typically stands for “Net Revenue Retention.”

NRR is a metric used to measure the amount of revenue a SaaS company retains from its existing customer base over a given period of time, typically a year. It takes into account upsells, cross-sells, renewals, and churn, and reflects the revenue growth or loss from existing customers.

The formula for NRR is:

NRR = (Total Revenue from existing customers in the current period – Revenue lost from existing customers in the current period) / Total revenue from existing customers in the previous period.

A positive NRR indicates that a SaaS company is retaining and growing revenue from its existing customers, while a negative NRR suggests that the company is losing revenue from its customer base.

NRR is an important metric for SaaS companies as it reflects the effectiveness of the company’s customer retention and upselling efforts. By improving NRR, a SaaS company can reduce churn and increase revenue without relying solely on new customer acquisition.

Useful Links:
  1. Net Revenue Retention – ChurnZero
  2. What is net revenue retention & how to calculate it – Paddle
  3. Net Revenue Retention Rate – MetricHQ

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Common Questions

  • What is the importance of NRR in SaaS?

    NRR is an important metric for SaaS companies as it reflects the effectiveness of the company’s customer retention and upselling efforts. By improving NRR, a SaaS company can reduce churn and increase revenue without relying solely on new customer acquisition.

  • How is NRR calculated in SaaS?

    NRR is calculated by taking the total revenue generated from existing customers in the current period, subtracting the revenue lost from existing customers in the current period, and then dividing the result by the total revenue generated from existing customers in the previous period.

  • What does a negative NRR indicate in SaaS?

    A negative NRR indicates that a SaaS company is losing revenue from its existing customer base. This could be due to churn, or customers downgrading their subscriptions. A negative NRR could be a warning sign that a SaaS company needs to improve its customer retention and upselling efforts.

  • What are some strategies to improve NRR in SaaS?

    Some strategies to improve NRR in SaaS include providing excellent customer service, offering personalized product recommendations, implementing a loyalty program, providing educational content to customers, and improving the onboarding process.

  • How does NRR differ from gross revenue in SaaS?

    Gross revenue in SaaS refers to the total amount of revenue generated by a company, including revenue from both new and existing customers. NRR, on the other hand, only takes into account the revenue generated from existing customers and reflects the revenue growth or loss from that existing customer base.

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