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Net MRR Retention (NRR) charts the change in monthly recurring revenue (MRR) retained from subscribers, after gains from expansion and losses from contraction and churn.
TL;DR
Net MRR Retention (NRR) charts the change of MRR retained in a given report interval considering revenue gained from expansion and losses due to contraction and churn within the interval. It gives you insight into how integral your product/service is to your customers. For SaaS businesses, NRR ideally exceeds 100%.
What insights can I gain from NRR?
Net MRR Retention shows how well you retain revenue from existing subscribers as they grow their relationship with your business. It’s an indicator of your product/service’s value and how well your pricing strategy is aligned with customers’ success. Put simply, when your customers see value in your product/service, they keep paying for it.
High NRR tells potential investors you have loyal customers and you’re able to grow revenue cost-efficiently. Successful companies have an NRR exceeding 100%. Use Benchmarks to compare your NRR to industry peers.
Chart Notes
- Excludes New Business and Reactivation.
- The value of Starting MRR is from subscribers with an Active or Past due subscription at the start of the report interval.
- Non-recurring payments do not contribute to this chart.
- When filtering by Plan > is one of, ChartMogul calculates the percentage of revenue retained when a subscriber switches plans. When the plan switch results in expansion, ChartMogul reports it as 100% of revenue retained. When the plan switch results in contraction, ChartMogul calculates the percentage of revenue retained from the subscription.
Calculation
ChartMogul calculates NRR as total MRR from existing subscribers at the start of the report interval plus expansion and offset by contraction and churn during the interval divided by total MRR from subscribers at the start of the interval:
(Starting MRR + Expansion MRR − Contraction MRR − Churn MRR) ÷ Starting MRR
Example
At the start of the month, you have $100 in MRR. During the month, one customer upgrades their subscription resulting in a $10 increase in MRR and you lose $10 to churn and $10 to contraction. Your net MRR retention rate is 90%: ($100 + $10 − $10 − $10) ÷ $100.
Chart Data
The Chart Data table for Net MRR Retention works differently than other charts. It provides the following breakdown:
- Starting MRR — The value of MRR at the beginning of the report interval.
- Expansion MRR — The net gain in MRR from existing customers in the report interval.
- Contraction MRR — The net loss in MRR from existing customers in the report interval.
- Churn MRR — The net loss of MRR from existing customers who canceled their last (or only) subscription in the report interval.
- Net MRR Retention — The percentage value of net MRR retained in the report interval.
Next Steps
- To view revenue retained excluding expansion, use Gross MRR Retention.
- View the cumulative (net) effect of all changes a customer makes to their subscriptions with Net MRR Movements.
- View net MRR retention by customer cohort with Cohort: MRR Retention Rate.