How to Calculate NRR

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So how do you calculate NRR specifically ? The basic formula is as follows:

NRR = (revenue from existing customers at the beginning of the period + increased revenue from upselling and cross-selling − decreased revenue from cancellations and downgrades) ÷ revenue from existing customers at the beginning of the period × 100 (%)

Point 1: Setting a period
In many cases, a fixed period such as one year or one quarter is belgium whatsapp number data divided and comparisons are made based on the revenue of existing customers at the beginning of the period. It is important to understand the continuation rate and the effect of retention measures in the long term without being distracted by short-term fluctuations.

Point 2: Upselling, cross-selling
, and churn NRR do not include sales increases from new customers. The increase from upselling and cross-selling is added, while the decrease in sales due to cancellations and downgrades from existing customers is subtracted, so the figure reflects how steadily and continuously you can obtain revenue from existing customers.

Example calculation
For example, consider the following scenario:

Monthly revenue from existing customers at the beginning of the period: 1 million yen
Increase due to upselling and cross-selling: 200,000 yen
Reduction due to cancellation or downgrade: 100,000 yen
The NRR for this month is
(1 million yen + 200,000 yen - 100,000 yen) ÷ 1 million yen × 100 = 110% .

This means that revenue from existing customer base increased 110% compared to the beginning of the fiscal year.

An NRR of over 100% means that revenue increases from upselling and cross-selling exceed revenue from cancellations and downgrades.

Why is NRR important?
With the rise of subscription-based businesses, more and more companies are placing importance on NRR .

The following three points are cited as the background to this.