Net Revenue Retention Rate vs Gross Revenue Retention Rate

Net Revenue Retention Rate (NRR) and Gross Revenue Retention Rate (GRR) measure revenue retention within an existing customer cohort. Both account for revenue lost through churn and downgrades. NRR also includes expansion through upsells, cross-sells, and price increases; GRR excludes expansion.

GRR is capped at 100%, while NRR can exceed 100% when expansion outweighs lost revenue. Use GRR to examine retention without expansion masking losses, and NRR to understand the cohort’s overall revenue change. Neither metric includes revenue from new customers.

For example, improving GRR from 85% to 92% after introducing an onboarding programme indicates stronger base revenue retention. If starting revenue is $100, GRR of 90% means $90 remains before expansion. NRR of 115% means expansion adds $25: 25 percentage points of starting revenue.

A business can also report NRR of 115% alongside GRR of 75%. Expansion offsets substantial revenue losses, so examine churn and contraction alongside the net result. Strong NRR alone does not establish strong retention across all customers.

Net Revenue Retention Rate

Gross Revenue Retention Rate

What is it?

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.

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.

Formula

Sum(MRR at the beginning of the period + expansion MRR during the period - downgraded MRR during the period - cancelled MRR during the period) / (MRR at the beginning of the period)

Sum(ARR at the beginning of the period + expansion ARR during the period - downgraded ARR during the period - cancelled ARR during the period) / (ARR at the beginning of the period)

Sum(renewing customers MRR or ARR) / Sum(MRR or ARR of customers due to renew)

Sum(MRR at the beginning of the period - downgraded MRR during the period - cancelled MRR during the period) / (MRR at the beginning of the period)

Sum(ARR at the beginning of the period - downgraded ARR during the period - cancelled ARR during the period) / (ARR at the beginning of the period)

Example

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

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

Published and updated dates

Date created: Oct 12, 2022

Latest update: Jun 4, 2026