A metric used to measure the percentage of revenue retained from existing customers over a given period, typically a year. This is in contrast to the Customer Retention Rate (CRR), which measures the percentage of customers retained over the same period.
Dollar Retention Rate Formula
Loading formula...Where:
- Loading formula...$ARR_0&s=2$ is the Annual Recurring Revenue at the beginning of the period
- Loading formula...$ARR_1&s=2$ is the Annual Recurring Revenue at the end of the period
- Loading formula...$ARR_{new}&s=2$ is the Annual Recurring Revenue from new customers acquired during the period
- Loading formula...$ARR_{expansion}&s=2$ is the Additional Annual Recurring Revenue from existing customers (upgrades, cross-sells, etc.)
- Loading formula...$ARR_{contraction}&s=2$ is the Lost Annual Recurring Revenue from existing customers (downgrades, cancellations, etc.)
This formula calculates the percentage of revenue retained from the existing customer base, considering factors such as upgrades, downgrades, and cancellations. A DRR above 100% indicates that the additional revenue from existing customers (expansions) exceeds the lost revenue (contractions). In comparison, a DRR below 100% suggests that the company is losing more revenue from existing customers than it is gaining.
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