SaaS MRR Waterfall & Net Revenue Retention (NDR) Formula

Calculate monthly recurring revenue (MRR) expansion, contraction, churn, and Net Dollar Retention (NDR) in Microsoft Excel.

Formula X-Ray Syntax Inspector

=LET(
  startMrr, [@CohortBeginningMRR],
  expansion, [@CohortExpansionMRR],
  contraction, [@CohortContractionMRR],
  churn, [@CohortChurnMRR],
  endMrr, startMrr + expansion - contraction - churn,
  IF(startMrr > 0, endMrr / startMrr, 1)
)

Interactive Token Breakdown (Click to Inspect)4 Arguments Mapped

startMrrargument

Beginning MRR base from active subscribers at month start.

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Why Legacy Formulas Fail Here

The Problem with Standard Excel Approaches

SaaS companies often struggle to calculate cohort-level Net Dollar Retention without expensive analytics software like ChartMogul or ProfitWell.

Calculation Logic

How Modern Dynamic Arrays Execute This Formula

Segments subscriber cohorts by acquisition month.

Tracks upsells, add-ons, downgrades, and cancellations separately.

Calculates compound monthly churn and annualized churn rate.

Visualizes SaaS Quick Ratio and Rule of 40 benchmarks.

Top-Quartile NDR

> 115% Annual Retention

Monthly Logo Churn Target

< 1.5% per month

Investor Standard

Bessemer & Series A/B format

Troubleshooting & QA

Common Excel Errors & How to Fix Them

#DIV/0!Root Cause: Cohort month beginning MRR is zero.

Solution: Handled by IF statement returning neutral 100% retention.

Mixing One-Time FeesRoot Cause: Including onboarding or setup fees inside MRR.

Solution: Log one-time professional services in non-recurring revenue columns.

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