What Good Net Revenue Retention Actually Looks Like: Why the Benchmark You Are Using Is Probably Wrong

Ask most SaaS leaders what good net revenue retention looks like and you will hear 120%. The median private B2B SaaS company is nowhere near that and the gap is not a performance problem. It is a benchmarking problem. Here is what the data actually says, why a single number is close to useless without context and what your board should be asking instead.

There is a number that follows SaaS leaders around. Good net revenue retention is 120%. It gets repeated in board meetings, investor updates and strategy offsites as though it were a law of physics. And for a certain kind of company, at a certain moment in the cycle, it was a reasonable target.

For most private B2B SaaS companies it is not. Holding yourself to it produces exactly the wrong behaviour. Teams that are performing at or above their real peer benchmark conclude they are failing. Leaders push CS teams toward aggressive expansion to close a gap that was never really there. Meanwhile the number that actually reveals whether the business is leaking, gross revenue retention, goes unexamined because everyone is staring at the headline.

This piece does three things. It sets out what the current benchmark data actually shows, explains why a single median is the wrong tool for the job and makes the case for the number your board should be asking for instead.

What the data actually says

Start with the headline. In Benchmarkit's 2025 SaaS Performance Metrics research, median net revenue retention for private B2B SaaS came in at 101%. Their read on it is worth quoting for the framing rather than the figure: retaining and expanding existing customers is becoming more challenging even as companies grow more dependent on expansion ARR.

That is a long way from 120%. And it is not a rounding error or a bad year. It reflects a structural difference between the companies these benchmarks cover and the companies the 120% number came from.

SaaS Capital, which has run an annual private SaaS survey for over a decade, is explicit about why the comparison breaks. Benchmarking private companies against public ones is of limited usefulness, because the sheer scale of public companies makes it an apples to oranges comparison that can mislead. If your mental benchmark was formed by reading about public software companies or by the funding environment of a few years ago, it is measuring a different kind of business than yours.

The second number in the data is the one that should worry people more and almost nobody quotes it. Benchmarkit's gross revenue retention benchmark has slipped from 90% to 88% over three years. Their own commentary calls the continued decrease a potential canary in the coal mine. To their credit they flag that some of the movement could come from selection bias in who participates. Take the caveat seriously. Then note that the direction of travel on the metric that excludes expansion is downward while everyone is optimising the one that includes it.

Why a single median is the wrong benchmark

Here is the more useful point. Even a correctly sourced median is close to meaningless as a target, because NRR varies enormously by the kind of company you are.

Both major private surveys land on the same conclusion about how to segment. SaaS Capital puts it plainly: for retention, benchmarking by average contract value is the best starting point, more than company age, revenue level or industry, because companies that share a similar selling price have the most in common. They are organised similarly, they go to market similarly and they support customers similarly. A company selling a twenty dollar a month product and a company selling a quarter million dollar contract are not in the same benchmark set in any meaningful sense. Benchmarkit reaches the same conclusion from the other side, noting that gross retention benchmarks are best analysed by ACV and that as ACV increases, so does GRR.

The mechanism is not mysterious. Higher-priced solutions usually involve longer sales cycles, deeper scoping and implementation, plus dedicated support and account management, all of which make the product stickier. They also tend to have more room to expand, through seats, products and price. A low-ACV, high-volume business has a structurally lower expansion ceiling and structurally higher churn. That is not a failure of its customer success team. It is the shape of the business.

To make it concrete, here is the one cleanly published quartile cut from SaaS Capital's 2025 survey. Companies with ACVs between $25,000 and $50,000 showed median NRR of 102%, with the top quartile at 111% and the bottom quartile at 97%.

Sit with that for a moment. In that segment, 111% puts you in the top quartile of your peers. Under the folk benchmark of 120%, a company at 111% would walk into a board meeting apologising. That is how a wrong benchmark manufactures a problem that does not exist. Worse, it pushes a team toward chasing expansion revenue when the actual constraint is somewhere else entirely.

The number your board should actually be asking for

If NRR alone is a weak benchmark, what is the stronger one? The gap between your net and gross revenue retention.

NRR blends two very different things: how much revenue you kept and how much you grew the customers who stayed. A company at 105% NRR could be keeping almost everything and expanding modestly. Or it could be losing a meaningful slice of its base while a handful of large accounts expand hard enough to paper over the hole. Those are opposite businesses with the same headline number.

Gross revenue retention is the honest floor, because it strips out expansion and cannot exceed 100%. It answers one question: of the revenue you started with, how much did you keep. A wide gap between a healthy NRR and a weak GRR is the signature of a leaky bucket being refilled by a few big accounts and it carries concentration risk that the blended number hides completely. When one of those expanding accounts leaves, the mask comes off all at once.

This is why the most useful benchmarking conversation is not "is our NRR good". It is three questions in sequence. What is our GRR and how does it compare to peers at our ACV. What is the gap between our GRR and NRR. And is that gap driven broadly across the base or by a small number of accounts we cannot afford to lose.

Why this compounds

None of this is a metrics purity argument. Retention drives growth and it does so non-linearly.

SaaS Capital's 2025 data shows the correlation directly. Across their survey of companies above one million in ARR, the median growth rate was 24%. Companies with NRR of at least 110% grew faster than that population median, while companies with NRR below 100% grew slower. Retention is not a defensive metric that sits beside growth. It is an input to growth. Because it repeats and compounds year after year, small differences separate dramatically over time.

The economics of where that growth comes from are just as stark. In Benchmarkit's 2025 data, the median company spent $2.00 in sales and marketing to acquire $1.00 of new customer ARR, a ratio that worsened by 14% in a year. Expansion ARR came in at $1.00. Growth from your existing customers costs roughly half what growth from new logos costs. Meanwhile expansion has become a larger share of the whole: it reached 40% of total new ARR at the median, up five percentage points year over year and more than half of new ARR at companies above $50 million.

Read those together and the strategic picture is hard to miss. The cheapest growth available to most SaaS companies is sitting inside their existing customer base, the market is becoming more dependent on it and the metric that measures whether you are keeping that base has been drifting the wrong way.

How to benchmark yourself properly

Four practical steps.

Find your real peer set. Segment by ACV first. A median drawn from companies with a wildly different price point and go to market motion is not your benchmark, however authoritative the source.

Lead with GRR. Know your gross retention and treat it as the floor. It is the number that tells you whether the product and the customer experience are holding, without expansion flattering the picture.

Track the NRR to GRR gap and its concentration. Understand not just how big the expansion contribution is but how many accounts it depends on.

Be sceptical of any benchmark you cannot trace. Which brings us to the uncomfortable part of researching this piece.

There is a widely circulated set of NRR segment benchmarks, usually given as roughly 118% for enterprise, 108% for mid-market and 97% for SMB, very often attributed to SaaS Capital. Those figures appear across aggregator sites, benchmark roundups and calculator pages. They do not appear in SaaS Capital's own published write-up of its 2025 retention survey, where the segment detail sits inside chart images and the only quartile cut given in the text is the $25,000 to $50,000 ACV band quoted earlier. The numbers may well be accurate readings of those charts or of the downloadable brief. But they are being passed around at second and third hand with an authoritative attribution attached. I could not verify them at the source, so they are not in this article.

That is the whole problem in miniature. The benchmark most people are managing to is a number they have never traced, applied to a peer group they have not defined. Before you accept any retention target, including the ones in this piece, ask where it came from, who was in the sample and whether those companies look anything like yours.

Frequently asked questions

What is a good net revenue retention rate?

It depends almost entirely on your average contract value. In Benchmarkit's 2025 research, median NRR for private B2B SaaS was 101%. In SaaS Capital's 2025 survey, companies with ACVs between $25,000 and $50,000 showed median NRR of 102%, with 111% at the top quartile. The commonly repeated 120% target reflects larger, often public companies and is not a realistic benchmark for most private B2B SaaS businesses.

Is 100% NRR good?

It means you are keeping the revenue you had, with expansion exactly offsetting churn and contraction. Against a median near 101% that is roughly typical rather than poor. But the more important question is what sits underneath it. A 100% NRR built on strong gross retention and modest expansion is a healthy business. The same 100% built on heavy churn offset by a few expanding accounts is a concentration risk waiting to surface.

What is the difference between NRR and GRR?

Gross revenue retention measures how much of your starting recurring revenue you kept, excluding upsells, cross-sells and price increases, so it can never exceed 100%. Net revenue retention adds expansion back in, so it can exceed 100%. GRR is the honest floor. NRR is the blended outcome. The gap between them tells you how much of your headline number depends on expansion.

Why is net revenue retention falling across SaaS?

Benchmark data shows both NRR and GRR drifting down over recent years, with Benchmarkit's gross retention benchmark moving from 90% to 88% across three years, though they note some of that could reflect selection bias among survey participants. Whatever the mix of causes, the practical implication for leaders is that expansion is being asked to carry more weight at the same time as the base is getting harder to hold.

Should NRR be benchmarked by ACV or by industry?

By ACV. SaaS Capital is explicit that contract value is a better segmentation than company age, revenue level or industry, because companies at a similar price point organise, sell and support in similar ways. Benchmarkit reaches the same conclusion for gross retention, noting that GRR rises as ACV rises.

If your NRR and your GRR are telling different stories, the gap is where your growth is quietly leaking. The Customer Success Economic Model shows what each point of retention is actually worth to your growth rate and the Board and Investor CS Reporting Pack puts the right numbers, properly segmented, in front of the people asking. Both come from the argument at the heart of The Compounding Customer: retention is the compounding engine, not a quarterly scramble.

Sources

All figures verified at the original publisher. Where a number could not be traced to its source, it has been excluded and the exclusion noted.

Benchmarkit, 2025 B2B SaaS Performance Metrics Benchmarks. URL: https://www.benchmarkit.ai/2025benchmarks. Primary source, verified at publisher. Median NRR 101%. Gross revenue retention decreased from 90% to 88% over three years, described by Benchmarkit as a potential canary in the coal mine, with their own caveat that it could reflect selection bias among participants. New customer CAC ratio at $2.00 median to acquire $1.00 of new customer ARR, up 14% in 2024, against an expansion CAC ratio of $1.00. Expansion ARR at 40% of total new ARR, up five percentage points year over year and above 50% at companies over $50 million. GRR best analysed by ACV, with GRR rising as ACV rises.

SaaS Capital, What is a Good Retention Rate for a Private SaaS Company in 2025? (published 18 September 2025). URL: https://www.saas-capital.com/blog-posts/what-is-a-good-retention-rate-for-a-private-saas-company/. Primary source, verified at publisher. Benchmarking retention by ACV is the best starting point, more than company age, revenue level or industry. Companies with ACVs of $25,000 to $50,000 showed median NRR of 102%, top quartile 111%, bottom quartile 97%. Median growth rate across the survey population above $1 million ARR was 24%, with companies at NRR of 110% or above growing faster than the median and those below 100% growing slower. Benchmarking private companies against public companies is of limited usefulness.

SaaS Capital, Examining the Gap Between Gross Revenue Retention and Net Revenue Retention. URL: https://www.saas-capital.com/blog-posts/examining-the-gap-between-gross-revenue-retention-and-net-revenue-retention/. Referenced for the principle that the GRR to NRR gap works as a sanity check on a company's metrics.