What is Net Dollar Retention?
Net Dollar Retention (NDR) is functionally identical to Net Revenue Retention (NRR). Both measure how much revenue you retain and grow from existing customers. The terms are used interchangeably across the industry.
NDR above 100% means your existing customer base is growing without new acquisitions. This is the hallmark of a sticky product with strong expansion mechanics.
Why NDR Matters
NDR is arguably the best single metric for product-market fit in SaaS. If customers stay and spend more, your product is delivering value. If they leave or spend less, something is broken.
Public SaaS companies report NDR as a key metric. Best-in-class companies like Snowflake, Datadog, and Twilio have reported NDR above 130%, indicating exceptional customer value expansion.
NDR Benchmarks
Below 90%: Concerning. You have a retention problem. 90-100%: Stable but not expanding. 100-120%: Good. Healthy expansion. Above 120%: Excellent. Strong product-market fit.
NDR = (Starting ARR + Expansion - Contraction - Churn) ÷ Starting ARR × 100
Same as NRR but often calculated annually on cohorts
Cohort analysis for customers acquired in 2024:
- Starting ARR (Jan 2024): $1,000,000
- Ending ARR (Jan 2025): $1,150,000
- Expansion: $250,000
- Contraction: $50,000
- Churn: $50,000
NDR = $1,150,000 ÷ $1,000,000 = 115%
This cohort grew 15% without any new sales. Excellent retention and expansion.