Net Revenue Retention (NRR)

What is net revenue retention?‍

Net Revenue Retention (NRR) measures how recurring revenue from existing customers changes over a set period, accounting for upgrades, downgrades, and churn. Unlike gross retention, which only reflects how much existing revenue is preserved, NRR captures the true picture of customer value growth or decline within the current base.

Why NRR matters

• Holistic customer value view: NRR reflects both retention and expansion, offering a more complete picture of account performance.
  
• Growth without acquisition: A strong NRR signals that growth is being driven by existing customers, reducing reliance on new acquisition.
  
• Investor confidence: High NRR is a key metric for valuing subscription businesses, often more important than raw acquisition numbers.
  

How to calculate NRR

NRR = (Starting recurring revenue + expansions: downgrades: churn) ÷ Starting recurring revenue × 100

• If NRR is 100% or higher, revenue from the existing base has held steady or grown.
  
• NRR below 100% indicates contraction in customer value.
  

Inclusions and exclusions

• Include: Renewals, upsells, cross-sells, and expansions within existing accounts.
  
• Exclude: Revenue from brand-new customers, one-time fees, and non-recurring charges.
  

NRR in subscription businesses‍

For subscription based brands, NRR connects directly to retention health. A high NRR means readers are not only renewing but also engaging with premium tiers, bundles, or add-ons. A declining NRR suggests downgrades or churn outweigh expansions, signaling risk. With Subsets, teams can track NRR alongside behavioral and engagement data, linking signals like content breadth, session activity, or dormancy to revenue outcomes so retention strategy becomes proactive rather than reactive.