Net Dollar Retention (NDR)
The percentage of recurring revenue retained and expanded from an existing customer cohort over a year, including upgrades and churn.
Net dollar retention (also called net revenue retention) measures how a cohort of existing customers' revenue changes over a trailing 12-month period, accounting for expansion (upsells, seat growth), contraction (downgrades), and churn (cancellations) — but excluding any revenue from brand-new customers. It's expressed as a percentage: above 100% means the existing customer base is growing revenue even before counting new logos.
NDR is one of the most closely watched metrics for B2B SaaS companies because it isolates the health of the existing customer relationship from new customer acquisition — a company can post strong headline growth driven entirely by new logos while its existing base is quietly shrinking, and NDR is what surfaces that.
NDR = (starting ARR + expansion - contraction - churn) / starting ARR, over a trailing 12-month periodA cohort starts the year with $10M in ARR. Over the year, they add $2.5M from expansion, lose $500K to downgrades, and lose $1M to churn. NDR = ($10M + $2.5M - $500K - $1M) / $10M = 110%.
NDR above 110% is considered excellent and typically signals a strong product with real expansion motion (seats, usage, upsells); below 90% is a serious red flag that investors will dig into hard, regardless of how fast total revenue is growing from new customers.
What's considered a good net dollar retention rate?
Above 100% is healthy, above 110-120% is considered excellent for B2B SaaS, and top-tier companies (often usage-based or seat-expansion models) can post NDR well above 130%.
Does NDR include new customers?
No — NDR specifically isolates the existing customer cohort from a starting point in time, tracking only expansion, contraction, and churn within that fixed group, excluding any revenue from customers acquired after that starting point.
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