How To Calculate Net Dollar Retention in Quickbooks Desktop Enterprise | Arithmix

Calculating net dollar retention is an important metric for any business. It helps you understand how much revenue you are retaining from your existing customers over a given period of time. This metric is especially valuable for subscription-based businesses, where customer retention is critical to long-term success. In this article, we will discuss what net dollar retention is, when it is valuable to calculate, and how to calculate it.

What Is Net Dollar Retention?

Net dollar retention is a measure of how much revenue you are retaining from your existing customers over a given period of time. It takes into account the revenue you are generating from existing customers, as well as any revenue lost due to customer churn or downgrades. Essentially, it tells you how much revenue you are retaining from your existing customer base, regardless of whether they are spending more or less than they were before.

Calculating net dollar retention is important because it gives you a clear picture of how well you are retaining your existing customers. If your net dollar retention is high, it means that you are doing a good job of keeping your customers happy and engaged. If it is low, it may be an indication that you need to focus more on customer retention strategies.

When Is It Valuable To Calculate Net Dollar Retention?

Net dollar retention is valuable to calculate for any business that relies on recurring revenue from customers. This includes subscription-based businesses, SaaS companies, and any other business that has a significant amount of recurring revenue. By calculating net dollar retention, you can get a better understanding of how much revenue you can expect to generate from your existing customer base over time.

Net dollar retention is also valuable to calculate if you are trying to identify areas where you can improve customer retention. By tracking this metric over time, you can see whether your efforts to improve customer retention are having an impact on your bottom line.

How To Calculate Net Dollar Retention

Calculating net dollar retention is relatively straightforward. To calculate this metric, you need to take the total revenue generated from your existing customers over a given period of time (usually a year) and subtract any revenue lost due to customer churn or downgrades. The formula for calculating net dollar retention is:

Net Dollar Retention = (Total Revenue from Existing Customers - Revenue Lost Due to Churn or Downgrades) / Total Revenue from Existing Customers

For example, let's say that your business generated $1 million in revenue from existing customers over the past year. During that same period, you lost $100,000 in revenue due to customer churn or downgrades. Using the formula above, your net dollar retention would be:

Net Dollar Retention = ($1,000,000 - $100,000) / $1,000,000 = 90%

This means that you retained 90% of your revenue from existing customers over the past year, even after accounting for any revenue lost due to churn or downgrades.

In conclusion, calculating net dollar retention is an important metric for any business that relies on recurring revenue from customers. By understanding how much revenue you are retaining from your existing customer base, you can make more informed decisions about customer retention strategies and overall business growth.

How Do You Calculate Net Dollar Retention in Quickbooks Desktop Enterprise

Quickbooks Desktop Enterprise itself isn’t naturally geared towards letting you calculate complex metrics like Net Dollar Retention. As an alternative, teams typically use products like Arithmix to import data from Quickbooks Desktop Enterprise and build out dashboards.

What is Arithmix?

Arithmix is the next generation spreadsheet - a collaborative, web-based platform for working with numbers that’s powerful yet easy to use. With Arithmix you can import data from systems like Quickbooks Desktop Enterprise, combine it with data from other systems, and create calculations like Net Dollar Retention.

In Arithmix, data is organized into Tables and referenced by name, not by cell location like a spreadsheet, simplifying calculation creation. Data and calculations can be shared with others and re-used like building blocks, vastly streamlining analysis, model building, and reporting in a highly scalable and easy to maintain platform. Data can be edited, categorized (by dimensions) and freely pivoted. Calculations are automatically copied across a dimension - eliminating copy and paste of formulas.

Arithmix is fully collaborative, giving your entire team access to your numbers and the ability to work together seamlessly.

Calculating Net Dollar Retention in Arithmix

Calculating metrics like Net Dollar Retention is simple in Arithmix. Once you've created your free account, you’ll be able to import your Quickbooks Desktop Enterprise data, and use it to create natural language formulas for metrics like Net Dollar Retention.

Arithmix is designed to give you the power to build any calculations you want on top of your Quickbooks Desktop Enterprise data, while also being easy to use and collaborate on. You can share your dashboards with users inside and outside of your organisation, making it easy to empower your whole team.