GLossary

Net retention rate (NRR)

Net retention rate (NRR) is a key SaaS metric that measures how much recurring revenue a company retains from its existing customers over a given period, accounting for upgrades, downgrades, and churn. It reflects the company’s ability to grow revenue without acquiring new customers.

A strong NRR indicates healthy adoption, customer satisfaction, and long-term business growth.

Why net retention rate matters

NRR is one of the most important indicators of SaaS business health. It helps companies:

Measure customer value over time – Understand how existing customers contribute to growth.
Identify expansion opportunities – Spot upsell and cross-sell potential within the customer base.
Improve retention strategies – Track churn trends and address risks proactively.
Increase valuation – Investors value companies with high, consistent NRR.

A company with an NRR above 100% is growing revenue from its existing customers, even without new acquisition.

How to calculate net retention rate

The formula for NRR is:

NRR = (Starting MRR + Expansion MRR - Contraction MRR - Churned MRR) ÷ Starting MRR × 100

For example, if you start with $100,000 in monthly recurring revenue, gain $20,000 from expansions, lose $5,000 from downgrades, and $5,000 from churn, your NRR is:

(100,000 + 20,000 - 5,000 - 5,000) ÷ 100,000 × 100 = 110%

How Instruqt helps improve NRR

Instruqt helps companies increase NRR by driving adoption and reducing churn. With Instruqt, teams can:

Deliver continuous education – Keep customers engaged with ongoing hands-on training.
Accelerate feature adoption – Showcase new capabilities with interactive labs.
Strengthen onboarding – Ensure customers realize value quickly and stay longer.
Expand usage – Introduce advanced use cases that encourage upsells.

By enabling deeper product engagement, Instruqt helps companies grow revenue within their existing customer base.