What Is Net Dollar Retention (NDR)? | Vantage

Net Dollar Retention Net Dollar Retention (NDR), also called Net Revenue Retention (NRR), measures the percentage of recurring revenue retained from existing customers over a period, including expansion (upsells, cross-sells) and contraction (downgrades, churn). NDR above 100% means existing customers are growing faster than they are churning, enabling revenue growth without any new customer acquisition.

Why net dollar retention matters

NDR is the single most important SaaS metric for investors and operators. NDR above 100% means the business can grow revenue even with zero new customers. Best-in-class SaaS companies (Snowflake, Datadog, Twilio) maintain NDR above 120%. NDR below 90% indicates a product-market fit problem: customers are not finding enough value to stay and grow.

How it works

NDR = (Starting MRR + Expansion MRR - Contraction MRR - Churned MRR) / Starting MRR * 100. Example: Starting MRR $100K, Expansion $15K, Contraction $3K, Churn $5K. NDR = ($100K + $15K - $3K - $5K) / $100K = 107%. This means existing customers grew revenue by 7% net, even accounting for churn and downgrades.

Common mistakes

• Confusing gross retention with net retention (gross does not include expansion)

• Calculating NDR monthly when the meaningful measurement is annual

• Not segmenting NDR by customer cohort or segment (averages mask problems)

• Ignoring contraction (downgrades are early warning signals of churn)

• Celebrating high NDR without understanding whether it is sustainable (one big upsell can inflate NDR temporarily)