How to Calculate Net Dollar Retention | Finance for SaaS

You'll learn about the importance of NDR, its key components, its formula, and how to measure it across customer cohorts.
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In this video, we learn about the definition & formula for net dollar retention, the components that go into its calculation, industry benchmarks on what is strong/weak NDR, and how to measure it on the cohort level as well as company-wide.
Sections:
0:54 definition & importance of NDR (why investors love high NDR!)
2:22 NDR components - how contraction/expansion revenue and time periods factor into NDR
3:08 simple net dollar retention calculation
4:31 net dollar retention industry benchmarks
5:46 how to calculate NDR using cohort analysis
11:08 how to measure company-wide net dollar retention (with mixed cohorts)
If you have questions - leave a comment below and I'll try to help. Cheers!
#netdollarretention #NDR #SaaS #startups

[@eric_andrews]

Questions? Let me know in the comments happy to discuss.

[@amospan14]

Very important concept. Thank you so much for covering this Eric! =D

[@eric_andrews]

Agreed, you got it!

[@LennyYT]

Awesome. Do you have a resource of al effective offers to try and maybe ranked by some sort of market baseline?

[@bcamo10]

Is this also applicable for SaaS companies that do not charge on a monthly basis? I.e. customers sign 1,2, or 3 year deals and pay up front, annually…. Thanks!

[@eric_andrews]

Absolutely. NDR is probably tracked even more closely with long deals and B2B SaaS because you have a lot of expansion & cross-sell opportunities that you can't see without NDR (if you just look at churn for example)

[@alexdunsdon]

should you use ndr for one time payments ?

[@eric_andrews]

It's a little bit of a discussion point and can go both ways, just make sure you provide your definition when you present it. I personally would probably exclude one-time things like implementations as I feel like that doesn't really reflect the underlying performance of the recurring part of my business and makes the metric less comparable over time. That said implementations might be a big part of your LTV so I would make sure you're including them in some metrics, even if that's not NDR.

[@hasandeniz]

wow, hard to watch!! whats with the gigling corners? I could not focus on the number... what a waste..