Net Revenue Retention (NRR)
The recurring revenue from existing clients a year later, including expansion and price increases, as a percentage of what they paid a year ago.
Formula
(Starting MRR + Expansion MRR − Churned MRR − Contraction MRR) ÷ Starting MRR × 100
Why Track It
NRR above 100% means the MSP grows even if it signs no new clients. It shows whether account management and vCIO work are turning into expansion revenue.
How It Is Measured
Take recurring revenue from clients active twelve months ago. Add expansion (new seats, added services, price increases) and subtract churn and contraction from those same clients. Divide by the starting recurring revenue. New clients won during the year are excluded. Source: PSA agreement history or billing system.
Constraints
Annual price increases can lift NRR while seat counts shrink, so read it beside GRR. It says nothing about the cost of the expansion.
Measurement Note
Optifai's 2025 benchmark of 939 companies puts median NRR for SMB accounts (under $25K contract value) at 97%, with the top quartile above 105%. That data is B2B SaaS, the closest published proxy for MSP agreements. The danger line is the SMB median.
Referenced In
Related KPIs
- All-In Seat Price (AISP)The average monthly recurring revenue earned per supported user seat across all managed services clients.
- Gross Revenue Retention (GRR)The share of recurring revenue from existing clients kept over a year, counting losses and downgrades but not expansion.
- Monthly Recurring Revenue (MRR)The total revenue billed each month under recurring agreements, such as managed services, security and cloud subscriptions.
Glossary and Answers
More in Client Health
Whether clients stay, spend more and would recommend the MSP. These numbers warn an owner about revenue at risk before the cancellation notice arrives.
- Client Net Promoter Score (NPS)Account Manager Lead
- Gross Revenue Retention (GRR)Account Manager Lead
- Largest Client Share of RevenueOwner
- Logo Churn RateAccount Manager Lead