What is Net Dollar Retention (NDR)?
Net Dollar Retention (NDR), also known as Net Revenue Churn, is a crucial metric that measures the percentage change in revenue from a cohort of customers over a period, typically a year. It accounts for all revenue changes, including churn (lost revenue) and expansion (upgrades, cross-sells). An NDR over 100% indicates that your business is growing from its existing customer base alone, a powerful sign of a healthy, scalable SaaS company.
Going Beyond Standard Churn Metrics
While customer churn tells you how many customers you lost, NDR tells you the net financial impact. For example, you could lose 10 small customers but have one large customer double their spending. Your customer churn rate would look bad, but your NDR would be healthy, showing your business is actually in a strong position. It provides a more sophisticated view of customer health and revenue momentum.
How to Use This Tool
- Starting MRR from Cohort ($): Enter the Monthly Recurring Revenue from a specific group of customers at the start of the period (e.g., all customers from January 1st last year).
- Ending MRR from Cohort ($): Input the current MRR from that exact same group of customers today, accounting for all upgrades, downgrades, and cancellations. Do not include any new customers acquired during the period.
Benefits of Tracking NDR
- Gauge Product Value: A high NDR proves that customers are finding increasing value in your product over time.
- Measure Upsell Success: It directly quantifies the success of your expansion revenue strategies.
- Attract Investors: NDR is a key metric that SaaS investors look for as a sign of a strong, efficient business model.
- Compound Growth: An NDR over 100% creates compound revenue growth, making your business more resilient to fluctuations in new customer acquisition.