Software Growth

GRR (Gross revenue retention)

Gross revenue retention is the share of recurring revenue you kept from existing customers, ignoring upgrades. It can never exceed 100%.

Gross revenue retention (GRR) measures how much of your starting revenue survives, with no credit for growth. It counts only losses: cancellations and downgrades. That makes it a plain test of whether customers keep paying you what they paid before. It is capped at 100%, so it cannot be flattered by one customer who expands a lot.

How to calculate GRR

This is the ChartMogul formula. Use only customers who were active at the start of the period, and cap each customer at their starting amount.

Your customers from a year ago paid $50,000 MRR. Cancellations removed $5,000 and downgrades removed $2,000.

You kept 86 cents of every starting dollar. If those same customers also expanded by $9,000, net revenue retention would be 104%, which looks fine and hides the 14% leak.

Why look at GRR as well as NRR

  • Expansion can cover a churn problem for a while. GRR shows the problem without the cover.
  • It reflects product value and support quality directly, since it ignores pricing moves and upsell.
  • It is the mirror image of gross revenue churn: GRR of 86% over a year means 14% gross revenue churn.

What good looks like

No single benchmark fits every business, so reason from your market. Lenny Rachitsky's benchmark study covers net retention rather than gross, but it shows the spread: products sold to very small businesses sit far below enterprise products, and the same ordering holds for gross retention. As a rough guide, compare yourself to your own history by cohort first, and to peers selling at a similar price point second.

Common mistakes

  • Letting a customer's expansion offset another customer's loss inside the same line. Cap each customer at their starting MRR.
  • Counting reactivations as retained revenue. They were lost, so keep them out or label them.
  • Reporting only NRR to investors or buyers without GRR. Informed buyers will ask for it.

For small SaaS

If you sell flat-rate plans, GRR and NRR are nearly the same number, since there is little expansion. In that case GRR is the one to watch. For a product with $20,000 MRR, each point of GRR is $200 a year of base revenue, which is usually a better return than an equal point of conversion rate.

Sources

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