What is NRR?
Net Revenue Retention (NRR), also called Net Dollar Retention (NDR), measures the revenue change from your existing customer base over a period — accounting for upgrades, downgrades, and cancellations.
NRR = (Starting MRR + Expansion MRR - Contraction MRR - Churned MRR) / Starting MRR × 100
Example: You start the month with $10,000 MRR from existing customers.
- Expansions (upgrades): +$800
- Contractions (downgrades): -$200
- Churn (cancellations): -$300
NRR = ($10,000 + $800 - $200 - $300) / $10,000 × 100 = 103%
A 103% NRR means your existing customer base is growing in value even before you add a single new customer.
Why NRR is the Single Best Health Metric
MRR tells you where you are. NRR tells you where you're heading — without the noise of new acquisition.
A business with 95% NRR is slowly bleeding: even if you add new customers, you're partially refilling a leaky bucket. A business with 110% NRR is compounding: every cohort of customers becomes more valuable over time.
| NRR | Meaning | |-----|---------| | < 90% | 🔴 Serious retention problem | | 90–100% | 🟡 Revenue leaking — acceptable early stage | | 100–110% | 🟢 Healthy SaaS | | > 110% | 🚀 Exceptional — compounding growth from existing base | | > 120% | Enterprise-grade (Slack, Datadog territory) |
Negative Churn: The Holy Grail
When NRR exceeds 100%, you have negative churn — a term coined by SaaS investor David Skok. It means expansion revenue more than offsets customer cancellations.
For indie hackers, negative churn is achievable with the right pricing structure:
- Usage-based components that grow with the customer
- Seat-based plans for teams
- Higher-tier plans with meaningful feature differentiation
- Annual plan upgrades from monthly subscribers
NRR for Early-Stage Products
At under $5K MRR, NRR is noisy — small absolute numbers swing the percentage dramatically. One enterprise customer upgrading can take you from 95% to 130% in a month.
Focus on the qualitative signal: are customers getting more embedded in the product over time, or are they using it less? That behavior predicts NRR before the numbers are statistically meaningful.
How Makerfolio Tracks This
Makerfolio's analytics breaks down your monthly MRR movement into new, expansion, contraction, and churned components — giving you the underlying numbers to calculate NRR and understand where your revenue is actually coming from.