Net Dollar Retention (NDR)
The Elvish and Dwarvish words for the same river — same concept as NRR, differently framed for different investors.
Net Dollar Retention (NDR) and Net Revenue Retention (NRR) refer to essentially the same metric: the percentage of existing customer revenue retained over a period, accounting for expansion, contraction, and churn. The formula is identical: (Starting Period ARR + Expansion ARR - Contraction ARR - Churn ARR) ÷ Starting Period ARR × 100. In practice, the two terms are used interchangeably in investor conversations, board decks, and S-1 filings, with individual companies choosing one or the other based on convention or investor preference. Some practitioners use NDR specifically for usage-based businesses (where "dollars" more naturally reflects variable consumption) and NRR for seat-based businesses, but this distinction is informal and inconsistent across the industry.
Where NDR and NRR sometimes differ in practice is in the measurement cohort and time period conventions. Some definitions of NRR measure the retention of a specific starting cohort over twelve months; some definitions of NDR use a trailing twelve-month rolling calculation. Some methodologies exclude customers acquired in the measurement period from the denominator; others include all customers at any point during the period. These definitional variations can make comparing NDR/NRR figures across companies difficult, and investors increasingly ask for precise definitions when evaluating retention metrics. Companies with strong NDR (above 120%) routinely highlight this as a key competitive advantage in fundraising and IPO processes.
For teams communicating about revenue retention in any public context — investor updates, board decks, press releases, or marketing materials — understanding that NDR and NRR are largely synonymous (with potential definitional nuance) prevents confusion when different stakeholders use different terminology. Video content for investor relations, financial communications, or executive thought leadership that references retention metrics should use whichever term the company has standardized on internally and be consistent across all communications. The substance — that existing customers are paying more over time — matters far more than which three-letter acronym describes it.
Related terms
- Net Revenue Retention (NRR)— Whether your existing Fellowship is growing its contribution — without adding any new members to the party.
- Gross Revenue Retention (GRR)— NRR without expansion's flattery — just the raw retention story, like the One Ring without the enchantment.
- Expansion MRR— Revenue that grows without new recruitment — the Ents awakening: slow to start, unstoppable once moving.
- Churn Rate— The percentage who walked into the Prancing Pony and never came back — the metric nobody wants to present.