// Glossary · ops

NDR (Net Dollar Retention)

Also: net dollar retention · NRR · net revenue retention

Revenue from a cohort of customers a year later divided by their original revenue, including expansion. Above 110% is good SaaS; above 130% is exceptional.

Net Dollar Retention measures what happened to a cohort of customers revenue over twelve months, including cancellations, downgrades, and expansion. The formula takes the cohort revenue today, divides by the cohort revenue twelve months ago, and expresses the result as a percentage. A cohort that started at $100K MRR and now sits at $122K MRR (after losing $18K to churn and gaining $40K through expansion) has 122% NDR. Above 100% means expansion outpaced losses and the business grows even without new logos. Below 100% means the leaky-bucket problem: new logos have to fill the gap before they fund growth.

NDR is the single most predictive metric for SaaS valuation in venture markets. A company at 130% NDR can grow 50% year-over-year while spending modestly on acquisition because existing customers fund the next year revenue base. A company at 90% NDR has to acquire 110% of current revenue worth of new customers just to stay flat. Public SaaS comparables consistently show valuation multiples 2 to 3x higher for businesses above 120% NDR versus those between 100% and 110%. For funded teams pitching the next round, NDR is the slide the board returns to repeatedly.

The mechanics that move NDR are concrete. Reducing churn rate lifts NDR linearly. Adding seat expansion at renewal lifts NDR through expansion revenue. Tiering pricing so usage growth produces revenue growth automatically lifts NDR without sales effort. The AI Ops Department ships cohort MRR views that decompose NDR into churn, downgrade, expansion, and reactivation components so the team knows which lever is moving the number. Without that decomposition, the headline NDR number is true but unusable for action.

// Examples
  • A Series B SaaS reports 134% NDR powered by seat-based expansion: existing customers add seats faster than new ones cancel.
  • A vertical SaaS at 102% NDR identifies the gap as 8% downgrade churn at the smallest plan tier and ships pricing changes that lift NDR to 118% over two quarters.
  • A board deck decomposes 122% NDR into 6% gross churn, 4% downgrade, 28% seat expansion, and 4% usage upsell, traceable to the underlying transactions.
// Common questions
What is a good NDR for a SaaS company?
Above 110% is good, above 120% is great, above 130% is exceptional and rare. For early-stage SaaS at Seed or Series A, the number is noisy because cohorts are small. By Series B, the bar climbs. Public SaaS leaders consistently report 125% or higher.
Is NDR the same as NRR?
Yes. Net Dollar Retention and Net Revenue Retention refer to the same metric. NDR is more common in US venture and operator language; NRR shows up more in public-company finance reporting. The formula is identical. Both include expansion revenue from existing customers.
How do I lift NDR?
Three levers in order of impact: reduce churn, add expansion paths (seats, usage tiers, modules), and reactivate dormant accounts. The math always favors fixing churn first because every churned dollar requires expansion or new logo dollars to replace, and expansion is usually cheaper than acquisition.
Why does NDR matter more than gross retention?
Gross retention shows the leaky-bucket size. NDR shows whether the business compounds. A company can have 92% gross retention (poor) and still hit 130% NDR if expansion is strong enough, which signals product-market fit even with churn problems. Investors weight NDR roughly 3x harder than gross retention in valuation conversations.
// Related terms
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