NDR (Net Dollar Retention)
What is NDR (Net Dollar Retention)?
NDR (Net Dollar Retention), also known as Net Revenue Retention (NRR), is a SaaS metric that measures the percentage of recurring revenue retained from existing customers over a specific period, including expansions, upgrades, and downgrades, but excluding new customer acquisition. NDR is expressed as a percentage and reveals whether your existing customer base is growing or contracting in value.
Unlike gross retention metrics that only measure losses, NDR captures the full picture of customer revenue dynamics. A 120% NDR means that even if you acquired zero new customers, your revenue from existing customers grew by 20% through expansion, upsells, cross-sells, and upgrades. This metric has become the gold standard for evaluating SaaS business health because it reflects both customer satisfaction and your ability to expand accounts over time.
NDR is particularly critical for product-led growth companies and subscription businesses where expansion revenue drives growth efficiency. Top-performing SaaS companies target NDR above 120%, while best-in-class organizations achieve 130% or higher. Investors scrutinize NDR closely because it indicates sustainable growth potential without the high customer acquisition cost burden of new customer acquisition. Strong NDR also suggests product-market fit, effective customer success strategies, and a pricing model that accommodates account growth.
Key Takeaways
Growth Engine Indicator: NDR above 100% means your existing customers generate more revenue over time, creating sustainable growth without relying solely on new customer acquisition
Combines Multiple Signals: NDR factors in expansion revenue, upgrades, cross-sells, downgrades, and churn into a single metric that reflects overall account health
Investor Favorite: Public SaaS companies with NDR above 120% typically command higher valuations because it demonstrates efficient, capital-light growth potential
Product-Led Growth Indicator: High NDR suggests strong product value and natural expansion paths that drive organic revenue growth within accounts
Benchmarking Standard: NDR varies by company stage—early-stage companies may see 90-110%, while mature SaaS leaders target 120-130%+
How It Works
NDR calculates the net change in recurring revenue from a cohort of customers over a defined period (typically monthly or annually). The calculation starts with revenue from existing customers at the beginning of the period, then adds expansion revenue from upgrades, upsells, and cross-sells, and subtracts revenue losses from downgrades and churn.
The formula works by isolating existing customer revenue movements while excluding new customer bookings. This provides a pure view of whether your current customer base is becoming more or less valuable. For example, if you start January with $1M in ARR from existing customers, add $300K in expansion revenue, lose $50K to downgrades, and $100K to churn, your NDR for that period would be 115% ($1.15M / $1M).
The metric operates on cohort analysis principles, tracking the same group of customers across time periods. GTM teams use NDR to evaluate customer success effectiveness, product adoption patterns, and pricing strategy performance. RevOps leaders monitor NDR alongside gross revenue retention to separate expansion performance from retention performance, identifying whether growth comes from keeping customers or expanding accounts.
NDR measurement requires clean revenue data and proper categorization of expansion, contraction, and churn events. Most companies calculate NDR monthly for operational monitoring and annually for investor reporting. Advanced revenue operations teams segment NDR by customer cohort, product line, customer segment, or acquisition channel to identify expansion opportunities and retention risks.
Key Features
Includes Expansion Revenue: Captures upsells, cross-sells, and upgrades that increase customer value over time
Excludes New Customers: Isolates existing customer performance from new acquisition efforts
Cohort-Based Calculation: Tracks specific customer groups across defined time periods for accurate trending
Revenue Quality Indicator: Values above 100% signal that customers find increasing value in your product
Predictive Growth Metric: Strong NDR reduces dependency on expensive new customer acquisition for growth targets
Use Cases
SaaS Growth Evaluation
Public and private SaaS companies use NDR as a primary metric for board reporting and investor communications. A company with $50M ARR and 120% NDR can grow to $60M from existing customers alone, reducing pressure on sales and marketing efficiency. Investors evaluate NDR alongside ARR growth and CAC payback period to assess capital efficiency and sustainable growth trajectories.
Customer Success Performance
Customer success teams align compensation and goals around NDR targets, tracking expansion revenue, churn rate, and account penetration. A customer success leader might set quarterly NDR goals of 110% for the existing customer base, driving initiatives like feature adoption programs, business reviews, and expansion playbooks to increase customer spend without acquisition costs.
Product Strategy and Roadmap
Product teams analyze NDR by feature usage and product tier to identify natural expansion paths. If customers using advanced analytics features show 140% NDR while basic users show 95% NDR, product teams prioritize features that drive upgrades to higher-value tiers, creating self-serve expansion mechanisms that boost overall NDR performance.
Implementation Example
NDR Calculation and Tracking Dashboard
Most revenue operations teams build NDR tracking dashboards in their data warehouse or business intelligence tool, pulling data from CRM and billing systems.
Monthly NDR Calculation:
Component | Value | Description |
|---|---|---|
Starting ARR (Jan 1) | $1,000,000 | Revenue from existing customers at period start |
Expansion Revenue | $150,000 | Upsells, cross-sells, upgrades during period |
Contraction Revenue | ($30,000) | Downgrades during period |
Churned Revenue | ($70,000) | Customers who canceled during period |
Ending ARR (Jan 31) | $1,050,000 | Net revenue from the cohort |
NDR | 105% | ($1,050,000 / $1,000,000) × 100 |
NDR Cohort Analysis by Customer Segment:
NDR Monitoring Framework:
According to research from Bessemer Venture Partners on cloud benchmarks, best-in-class SaaS companies maintain NDR above 120%, while the median hovers around 105-110%. Companies should track:
Monthly NDR: Operational metric for customer success teams
Annual NDR: Strategic metric for board and investor reporting
Cohort NDR: Track by acquisition quarter, customer segment, or product tier
Logo vs. Dollar Retention: Compare logo retention to NDR to understand if growth comes from more customers or bigger customers
Revenue operations teams typically set up automated NDR calculations using SQL queries or revenue analytics platforms like ChartMogul, Baremetrics, or custom data warehouse models. The key is maintaining clean revenue categorization and consistent cohort definitions across reporting periods.
Related Terms
NRR (Net Revenue Retention): Alternative term for NDR, measuring the same metric
GRR (Gross Revenue Retention): Retention metric that excludes expansion revenue, showing pure retention performance
ARR (Annual Recurring Revenue): The total yearly revenue from subscriptions, which NDR helps grow
Churn Rate: Percentage of customers or revenue lost, a key component of NDR calculations
Expansion Revenue: Additional revenue from existing customers through upsells and cross-sells
Customer Lifetime Value: Total revenue expected from a customer, strongly influenced by NDR
Logo Retention: Customer count retention, compared with NDR to understand account expansion
Revenue Operations: Function responsible for tracking and optimizing NDR performance
Frequently Asked Questions
What is NDR (Net Dollar Retention)?
Quick Answer: NDR measures the percentage of revenue retained from existing customers over time, including expansions and excluding new customer revenue. NDR above 100% indicates your customer base is growing in value.
Net Dollar Retention provides a complete view of customer revenue dynamics by capturing expansion revenue (upsells, cross-sells, upgrades), contraction (downgrades), and churn (cancellations) in a single metric. It answers the critical question: "If we stopped acquiring new customers today, would our revenue grow or shrink?" This makes NDR essential for evaluating business health and growth sustainability in subscription models.
What's the difference between NDR and NRR?
Quick Answer: NDR (Net Dollar Retention) and NRR (Net Revenue Retention) are the same metric with different names. Both measure revenue retention including expansion revenue from existing customers.
Some companies prefer "Net Dollar Retention" while others use "Net Revenue Retention," but the calculation and business meaning are identical. Industry analysts and public company filings use both terms interchangeably. The key distinction is with GRR (Gross Revenue Retention), which excludes expansion revenue and can never exceed 100%, while NDR/NRR includes expansion and can exceed 100%.
What is a good NDR for SaaS companies?
Quick Answer: Best-in-class SaaS companies target NDR above 120%, while the median is 105-110%. Early-stage companies may see 90-100% NDR, which improves as product-market fit and customer success mature.
NDR benchmarks vary by company stage, customer segment, and product type. Enterprise-focused SaaS companies typically achieve higher NDR (115-130%) due to larger expansion opportunities, while SMB-focused companies may see 95-105% due to higher churn rates. According to OpenView's SaaS benchmarks, public SaaS companies with NDR above 120% trade at premium valuations because this indicates efficient, sustainable growth.
How do you calculate NDR?
NDR is calculated by taking the ending recurring revenue from a customer cohort, divided by the starting recurring revenue, expressed as a percentage. The formula is: NDR = (Starting ARR + Expansion Revenue - Contraction Revenue - Churned Revenue) / Starting ARR × 100. For example, starting with $1M ARR, adding $300K expansion, losing $50K to downgrades and $100K to churn gives you $1.15M ending ARR, or 115% NDR.
The calculation requires clean categorization of revenue movements. Expansion includes upgrades to higher tiers, additional seats or licenses, cross-sells of new products, and usage-based expansion. Contractions include downgrades to lower tiers or seat reductions. Churn includes full cancellations. Most companies calculate monthly NDR for operations and annual NDR for strategic reporting and investor communications.
Why is NDR important for SaaS businesses?
NDR is critical because it measures growth efficiency and customer satisfaction simultaneously. High NDR (above 120%) means you can grow revenue without proportionally increasing sales and marketing spend, improving CAC payback period and capital efficiency. NDR also indicates product-market fit—if customers consistently expand usage and spending, your product delivers increasing value over time.
Investors prioritize NDR in SaaS valuations because it predicts sustainable growth. A company with $50M ARR and 120% NDR will reach $60M from existing customers alone, providing a revenue floor that reduces growth risk. Companies with NDR above 120% can afford longer sales cycles and higher CAC because existing customer expansion partially funds new customer acquisition, creating a more sustainable growth model.
Conclusion
Net Dollar Retention (NDR) has emerged as one of the most critical metrics for evaluating SaaS business health and growth potential. For GTM teams, NDR provides a comprehensive view of whether your customer base is becoming more or less valuable over time, combining retention performance with expansion effectiveness into a single, actionable metric.
Marketing teams use NDR insights to refine ideal customer profile definitions, targeting customers more likely to expand. Sales teams align account planning around expansion opportunities that drive NDR. Customer success teams structure programs, compensation, and account strategies to maximize retention and expansion. Revenue operations teams monitor NDR alongside gross revenue retention and expansion rate to diagnose performance drivers and identify improvement opportunities across the customer lifecycle.
As subscription business models continue to dominate B2B SaaS, NDR will remain the definitive measure of customer value growth and business sustainability. Companies that consistently achieve NDR above 120% demonstrate product value, effective customer success strategies, and efficient growth models that reduce dependency on expensive new customer acquisition. For any SaaS organization, understanding and optimizing NDR is essential for building a capital-efficient, scalable growth engine.
Last Updated: January 18, 2026
