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Net dollar retention (NDR) measures recurring revenue from existing customers after customers expand, downgrade, or cancel. It shows whether your current customers are spending more, spending less, or staying about the same before you add revenue from new customers.
Benchmarkit’s 2025 business-to-business (B2B) software-as-a-service (SaaS) benchmarks put median net revenue retention at 101%, which shows companies are struggling to retain and grow their customers. The same report found that expansion annual recurring revenue (ARR) made up 40% of total new ARR in 2024, showing how important upgrades and add-ons have become.
When NDR drops, companies need more new sales to replace lost sales revenue from existing customers. In the article, you’ll learn more about why net dollar retention matters, benchmarks, as well as tips for improving NDR.
What is net dollar retention?
Net dollar retention (NDR), also called net revenue retention (NRR), measures how much recurring revenue a company earns from existing customers over a set period. NDR includes revenue changes from:
- Existing customers who renew
- Customers who cancel or churn
- Customers who downgrade
- Customers who upgrade
- Customers who buy additional products or services
It excludes revenue from new customers added during the same period.
NDR is a useful metric for businesses with recurring revenue, such as SaaS companies, subscription businesses, and membership programs. These businesses rely on customers to continue paying over time. According to High Alpha’s 2025 SaaS Benchmarks Report, SaaS companies with high NRR and low customer acquisition costs had a median growth rate of 71%.
A high NDR means existing customers generate more revenue after churn and downgrades are accounted for. A lower NDR means revenue from current customers has decreased, which may require more new customer acquisition to offset the decline.
How to calculate net dollar retention
Start with recurring revenue from existing customers at the beginning of a measurement period. Two options are:
- Monthly recurring revenue (MRR). Measures revenue from customers over a monthlong period. Useful for analyzing short-term ups and downs.
- Annual recurring revenue (ARR). Annualized measure of recurring revenue. For long-term forecasting.
Have the following inputs ready:
- Beginning revenue. Recurring revenue from existing customers at the start of the period.
- Expansion revenue. Added revenue from upgrades, upsells, or cross-sells.
- Contraction revenue. Revenue lost when existing customers downgrade.
- Churned revenue. Revenue lost when customers cancel.
Once you have those numbers, subtract contraction and churned revenue from beginning revenue, then add expansion revenue. Divide the result by beginning revenue and multiply by 100.
This is the formula:
NDR = [(Beginning revenue + expansion revenue − contraction revenue − churned revenue) / Beginning revenue] × 100
Example of an NDR calculation
Here’s an example of an NDR calculation:
- Beginning revenue: $100,000
- Expansion revenue: $20,000 (upsells)
- Contraction revenue: $5,000 (downgrades)
- Churned revenue: $10,000 (cancellations)
Plug these four numbers into the formula: $100,000 + $20,000 – $5,000 – $10,000. This equals $105,000.
Divide that number by $100,000 (the beginning revenue), then multiply the result by 100. This produces an NDR of 105%.
Net dollar retention vs. gross dollar retention
NDR and gross dollar retention (GDR) both measure revenue from existing customers. The difference is in expansion revenue.
NDR includes revenue gained from upgrades, upsells, and cross-sells. GDR leaves out that revenue and looks only at what remains after churn and downgrades.
| Term | Also called | Includes | Shows |
|---|---|---|---|
| Expansion revenue | Account growth revenue | Upsells, cross-sells, upgrades | Added customer revenue |
| NDR | NRR | Losses plus expansion | Retained and grown revenue |
| GDR | GRR | Churn and downgrades | Retained revenue before expansion |
Net dollar retention
NDR measures how much recurring revenue a business retains and expands from existing customers in a set period. It subtracts revenue lost from churn and downgrades, and adds revenue gained from upgrades, upsells, and cross-sells.
NDR can exceed 100% when expansion revenue exceeds the revenue lost to churn and downgrades. For example, an NDR of 110% means the business ended the period with 10% more revenue from the same customer base, before adding revenue from new customers.
Gross dollar retention
GDR, also called gross revenue retention (GRR), measures how much recurring revenue remains after churn and downgrades during a period. It excludes revenue from upgrades, upsells, and cross-sells.
GDR is capped at 100% because it measures only retained revenue. A GDR of 90% means the business kept 90% of its recurring revenue from existing customers.
For example, say a SaaS business:
- Starts with $100,000 in recurring revenue
- Loses $10,000 from churn and downgrades
- Gains $20,000 from upsells
NDR would be 110%, because it includes the $20,000 in expansion revenue. GDR would be 90% because it excludes expansion revenue and reflects only the $10,000 loss.
Why net dollar retention matters
ChartMogul analyzed 3,500 software companies in 2025 and found a strong correlation between NRR and long-term growth. Low-retention companies were three times as likely to be shrinking as to be growing quickly.
NDR can also help show type of revenue growth. A company may grow total revenue by adding many new customers, but still lose revenue from existing accounts.
In that case, growth may depend heavily on sales and marketing. A company with strong NDR is getting more value from its current customer base, which can make revenue more stable.
For example, say two companies both grew revenue by 20% in a year.
| Company | NDR | What it suggests |
|---|---|---|
| Company A | 85% | Existing customer revenue declined |
| Company B | 115% | Existing customer revenue expanded |
Company A may need more new customers to offset churn and downgrades. Company B is growing partly because existing customers are spending more.
If you find customer acquisition to be expensive, NDR is an important metric to track. Retaining customers and expanding existing accounts can reduce pressure on sales and marketing teams. It can also help the business grow without depending only on new customers.
Net dollar retention benchmarks
There is no universal net dollar retention benchmark. It varies by business model, contract size, and pricing models.
For example, a self-serve SaaS business with low monthly pricing will usually have a different NDR range than an enterprise SaaS company with large annual contracts and more room for upsells.
SaaS Capital’s 2025 data shows median NRR for private B2B companies ranging from 98% for companies with an average annual contract value (ACV) below $12,000 to 106% for companies whose ACV is above $250,000.
| ACV band | Lower quartile | Median NRR | Top quartile |
|---|---|---|---|
| Less than $12,000 | 90% | 98% | 106% |
| $12,000 to $25,000 | 98% | 103% | 115% |
| $25,000 to $50,000 | 97% | 102% | 111% |
| $50,000 to $100,000 | 96% | 104% | 110% |
| $100,000 to $250,000 | 94% | 102% | 109% |
| More than $250,000 | 102% | 106% | 110% |
Use these benchmarks only as context, not as a pass-or-fail score. Compare your NDR with companies that have similar customers and pricing, and are at similar growth stages.
In general:
- An NDR below 100% suggests that churn and downgrades exceeded expansion revenue. The business lost revenue from its existing customer base.
- An NDR of 100% means expansion revenue covered churn and downgrades, or there were no changes. Existing customer revenue ended the period flat.
- An NDR above 100% indicates that expansion revenue exceeded churn and downgrades. Existing customers generated more revenue before new customer revenue was added.
Tips for improving NDR
NDR reflects customer satisfaction, retention, and growth within an existing customer base. Here are some tips for hitting your NDR benchmarks and achieving growth:
- Prioritize customer retention strategies
- Look for upsell and cross-sell opportunities
- Analyze revenue trends
Prioritize customer retention strategies
Retention reduces churned revenue. For subscription businesses, the goal is to spot cancellation risk before the customer leaves.
Look for changes in customer behavior, such as:
- Skipped subscription orders
- Lower order frequency
- Delayed renewals
- More service requests
- Fewer repeat purchases
Use Shopify Subscriptions to create and manage subscription plans in the Shopify admin. Customers can buy products on a recurring schedule, and stores manage subscription plans and contracts in one place.
If you notice signs of potential cancellation, respond with a reorder reminder, product education email, or personalized offer. For example, a coffee brand could send a reminder before a subscriber skips their next delivery. Or, a meal kit brand could offer a smaller plan before a customer cancels.
Look for upsell and cross-sell opportunities
Upsells and cross-sells increase expansion revenue opportunities. If you’re selling ecommerce subscriptions, expansion can come from add-ons, bundles, prepaid plans, or higher delivery frequency.
Consider an app like Selleasy to enable these opportunities. Selleasy can show frequently bought together products, add-ons, and related product recommendations to increase average order value.
Analyze revenue trends
Study your revenue trends to see how NDR is moving. With Shopify customer segments, you can group shoppers by behavior, purchase history, or other shared traits. Then use Shopify analytics to compare revenue activity by segment.
For example, a store could review whether repeat buyers are upgrading, whether subscribers are skipping orders, or whether certain product groups lead to more add-on purchases.
In a 2025 FedEx US holiday ecommerce survey, 50% of merchants overall planned to use past purchases to recommend certain items, and 47% planned to use browsing experience to recommend certain items.
Net dollar retention FAQ
What is a good net dollar retention rate?
A good NDR exceeds 100%. This indicates that your company is growing its revenue from existing customers through upsells, cross-sells, and expansions, even after accounting for downgrades and churn.
What does 100% net retention mean?
A 100% NRR, which is the same as NDR, means a company retains its existing revenue from current customers, with no net growth or loss from expansions, downgrades, or churn.
Can net dollar retention exceed 100%?
Yes. NDR can exceed 100% when expansion revenue exceeds losses as a result of churn and downgrades. An NDR of 105% means existing customers generated 5% more recurring revenue during the period, before revenue from new customers was added.
What is NRR in SaaS?
NRR stands for net revenue retention. In SaaS, it measures how much revenue a company earns from existing customers over a set period, and excludes new customer revenue.
How can businesses improve net dollar retention?
Businesses can improve NDR by reducing churn, limiting downgrades, and increasing revenue from existing customers.
