Formula
How to Calculate Net Dollar Retention
The percentage of recurring revenue retained from existing customers over a period, including expansion, contraction, and churn. Above 100% means existing customers are growing.
Net Dollar Retention Rate
NDR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100
Where
- Starting MRR
- = Monthly recurring revenue from existing customers at period start
- Expansion
- = Revenue increase from upsells, cross-sells, and price increases
- Contraction
- = Revenue decrease from downgrades
- Churn
- = Revenue lost from customers who canceled
What Is Net Dollar Retention?
Net Dollar Retention (NDR), also called Net Revenue Retention (NRR), measures how much recurring revenue a company retains from its existing customer base over a defined period (usually 12 months), accounting for upgrades, downgrades, and churn. Formula: NDR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100. An NDR of 120% means that even without acquiring a single new customer, revenue from the existing base grew 20% year-over-year. Top SaaS companies achieve 120-150% NDR. Investors view NDR as one of the most important SaaS metrics because it indicates product stickiness, pricing power, and expansion potential. Companies with NDR above 130% can grow revenue 20%+ annually from existing customers alone.
Why Net Dollar Retention Matters
NDR is the single best predictor of long-term SaaS company health. A company with strong NDR can sustain growth even if new customer acquisition slows. VCs use NDR as a key qualifier: most Series B+ investors want to see 110%+ NDR for B2B SaaS companies. Public SaaS companies with NDR above 130% (Snowflake, Datadog, Twilio) trade at premium multiples.
Frequently Asked Questions
How do you calculate Net Dollar Retention?
Net Dollar Retention is calculated using the formula: NDR = (Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100. The percentage of recurring revenue retained from existing customers over a period, including expansion, contraction, and churn. Above 100% means existing customers are growing.
What is a good Net Dollar Retention?
What constitutes a "good" Net Dollar Retention depends on context — the fund's stage, vintage year, and strategy. Check our benchmarks and calculators for specific ranges.