Kursivik HRtech charges per employee seat, and its biggest customers are cutting staff. Model next year's NRR before and after a planned 8% price rise, and say how much churn the price rise can afford to cause.

Without a price change Kursivik's NRR falls to 92.5%: the top 40 lose Rs 5.25 crore of seats and the rest add only Rs 1.5 crore. An 8% price rise on the surviving seats adds Rs 3.7 crore and lifts NRR to 99.9%, if nobody leaves because of it. Each point of large-account ARR that churns over the price costs Rs 0.32 crore, so the rise breaks even at 11.5% churn among those accounts. Raising prices only on the smaller, growing customers gives 95.1% with far less risk.

A school canteen that charges per pupil earns less the day the school shrinks, however good the food is. Seat pricing ties Kursivik's revenue to its customers' headcount, and headcount is the one thing those customers are now cutting. Because the seat count is trued up at renewal, a 15% staff cut at a customer is a 15% cut in that customer's ARR, with no decision by Kursivik involved. NRRNet revenue retention: this year ARR from last year customers, divided by their ARR last year. Above 100% means the existing base grew on its own. is the number that captures it, and it has to be built from the ARR each group holds, not from how many customers are in each group.

The top 40 customers hold 70% of Rs 50 crore, Rs 35 crore. Cutting 15% of their seats removes Rs 5.25 crore. The other customers hold Rs 15 crore and add 10%, Rs 1.5 crore. Next year's ARR from today's customers is Rs 46.25 crore, an NRR of 92.5%, and gross retention, counting only the losses, is 89.5%. The 40 large accounts drag the whole base down because the arithmetic is weighted by rupees, and the rupees sit with them.

Apply the rise to the seats that survive the cuts. Eight per cent of Rs 46.25 crore is Rs 3.7 crore, taking ARR to Rs 49.95 crore and NRR to 99.9%: flat, as management promised the board. To reach exactly 100% would need a rise of 8.1%. The bar on the bridge assumes every customer accepts the new price, including a procurement team that has just been told to cut spending along with staff. That assumption is the whole question.

Put a number on the risk rather than arguing about it. After the cuts and the rise, the top 40 hold Rs 32.13 crore of ARR, so each 1% of that base that walks away costs Rs 0.32 crore. The rise is worth Rs 3.7 crore in total. If more than 11.5% of the large-account ARR leaves because of the price, Kursivik ends the year below where it would have been by leaving prices alone. At a plausible 10% it collects Rs 46.74 crore, NRR 93.5%, having spent its goodwill for about 1.0 points.

Split the price rise by customer, because the two groups are in different moods. The smaller customers are adding seats and get the 8%: that is worth Rs 1.32 crore and takes NRR to 95.1% with little risk. For the top 40, hold the price and trade something else: a longer term, a seat floor that stops the count falling below a set level at renewal, or a shift from seats to a platform fee that does not move with headcount. A seat floor at 90% of current seats would halve the Rs 5.25 crore loss on its own.

The limit of the model is that churn from a price rise is a guess, not a rate: a customer either leaves or does not, and losing two of the top 40 could be 10% of that base in one quarter. That is the reason to avoid the across-the-board rise. An investor reading this also learns something about the product: a company whose revenue tracks its customers' headcount is a company whose next three years are being decided in other people's HR departments.