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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.

Client Health

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

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.

All KPIs
Sources1
  1. Optifai: B2B SaaS Net Revenue Retention Benchmarkoptif.ai

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