GRR vs NRR
Gross Revenue Retention Rate (GRR) and Net Revenue Retention Rate (NRR) measure different aspects of customer revenue retention in SaaS businesses. GRR focuses purely on revenue retained from existing customers, excluding any expansion revenue from upsells, cross-sells, or price increases, and is always capped at 100% since it only measures what percentage of starting revenue is retained. NRR, in contrast, includes both retained revenue and any expansion revenue from existing customers, allowing it to potentially exceed 100% if expansion outpaces churn, providing a more complete picture of how customer relationships evolve over time.
A SaaS company should highlight Gross Revenue Retention when analyzing core product stickiness or evaluating the effectiveness of customer success initiatives aimed at reducing churn. For example, if a company implements a new onboarding program and sees their GRR increase from 85% to 92%, this clearly demonstrates improved base retention regardless of expansion activity. Alternatively, the same company would emphasize Net Revenue Retention when communicating with investors or demonstrating growth potential within the existing customer base. If the company has an NRR of 115% despite a GRR of only 90%, it shows that while they're losing 10% of their initial revenue to churn, the remaining customers are expanding their usage by 25%, resulting in net growth from the existing customer base alone—a powerful indicator of product-market fit and sustainable growth prospects.
Gross Revenue Retention Rate
Net Revenue Retention Rate
What is it?
Gross Revenue Retention (GRR) Rate is the percentage of recurring revenue retained from existing customers in a defined time period, including downgrades, and cancels. It does not include any expansion revenue. GRR is also commonly referred to as Gross Renewal Rate.
Net Revenue Retention (NRR) Rate, also known as Net Dollar Retention (NDR), is the percentage of recurring revenue retained from existing customers in a defined time period, including expansion revenue, downgrades, and cancels. This churn metric gives a comprehensive view of positive as well as negative changes with respect to customer retention.
Who is it for?
Categories
Formula
Example
Example A: A company has 100 customers, each paying $2,000 per month. MRR at the beginning of the month is $200,000. Within the month, 2 customers downgrade by $500 each, and 1 customer cancels. Applying the Gross Retention formula, we get ($200,000 - ($500 x 2) - $2,000) / $200,000 = $197,000 / $200,000 = 98.5% GRR expressed monthly
Here's an example of how to calculate Net Revenue Retention (NRR). We'll call this scenario A: A company has 100 customers, each paying $2,000 per month. MRR at the beginning of the month is $200,000. Within the month, 1 customer adds a $4,000 MRR upgrade, 2 downgrade by $500 each, and 1 customer cancels. Based on the Net Dollar Retention formula, NRR = ($200,000 + $4,000 - ($500 x 2) - $2,000) / $200,000 = $201,000 / $200,000 = 100.5% expressed monthly Now let's look at Scenario B: Another company has 100 customers paying $20,000 for annual subscriptions. Within a one month period, 10 customers are due for renewal, only 9 actually renew, 1 adds a $5000 ARR upgrade, and 2 downgrade their subscription by $2000 each. Net Dollar Retention = ($20,000 x 9) + $5,000 - ($2,000 x 2)) / ($2,000 MRR x 10) = $19,000 / $20,000 = 95.0% expressed monthly
Published and updated dates
Date created: Oct 12, 2022
Latest update: Mar 17, 2025
Date created: Oct 12, 2022
Latest update: Mar 17, 2025