retention rate

Retention rate in SaaS is a high-level metric that measures a company's ability to keep its customers or revenue over a specific period. It is typically broken down into two main types: Customer (or Logo) Retention, which tracks the percentage of individual accounts that remain active, and Revenue Retention, which tracks the percentage of dollar value maintained from those accounts. Unlike one-time sales businesses, SaaS companies rely on high retention to recoup customer acquisition costs and drive long-term profitability. A retention rate above 100% is possible in revenue terms (Net Revenue Retention) if the expansion from existing customers—through upsells or seat additions—outpaces the revenue lost from cancellations and downgrades.