What Is Gross Revenue Retention (GRR)?

While everyone talks about growing revenue, the real question is: how much revenue are you actually keeping from your existing customers?

Gross Revenue Retention (GRR) shows exactly that. It measures how much recurring revenue you retain from existing customers over time, excluding any upsells or expansions.

Think of GRR as your business’s foundation – it tells you how stable your revenue really is.

What Is Gross Revenue Retention?

Gross Revenue Retention (GRR), also called Gross Dollar Retention (GDR), measures the percentage of recurring revenue you keep from existing customers over a specific period.

Here’s what makes GRR unique:

• It only looks at retention, not growth
• It excludes expansion revenue (upsells, cross-sells)
• It can never exceed 100%
• It shows your revenue stability without the “noise” of upsells

GRR answers a critical question: If you stopped all upselling efforts tomorrow, how much revenue would you keep?

How to Calculate Gross Revenue Retention

The GRR formula is simple:

GRR = (Starting MRR – Churn MRR – Contraction MRR) ÷ Starting MRR × 100

What each part means:

• Starting MRR = Monthly recurring revenue at the beginning of the period
• Churn MRR = Revenue lost from customer cancellations
• Contraction MRR = Revenue lost from downgrades/reductions

Gross Revenue Retention Example

Let’s say your SaaS company starts January with $500,000 in MRR from existing customers.

During January:

• You lose $25,000 from customer cancellations (churn)
• You lose $15,000 from customers downgrading plans (contraction)
• Note: We ignore any upsells or new customer revenue

Calculation: GRR = ($500,000 – $25,000 – $15,000) ÷ $500,000 × 100 GRR = $460,000 ÷ $500,000 × 100 = 92%

This means you retained 92% of your starting revenue from existing customers.

What Is a Good GRR Rate?

GRR benchmarks vary significantly by customer segment:

Enterprise SaaS (High ACV):

• Excellent: 95%+
• Good: 90-95%
• Average: 85-90%
• Concerning: Below 85%

Mid-Market SaaS:

• Excellent: 90%+
• Good: 85-90%
• Average: 80-85%
• Concerning: Below 80%

SMB/Small Business SaaS:

• Excellent: 80%+
• Good: 70-80%
• Average: 60-70%
• Concerning: Below 60%

Why the difference? Enterprise customers have larger contracts, more switching costs, and longer decision cycles – making them “stickier.”

Why Gross Revenue Retention Matters

1. Shows True Revenue Stability

GRR reveals how stable your revenue base really is. High expansion revenue can mask serious churn problems in NRR, but GRR exposes the truth.

2. Predicts Long-Term Viability

If you can’t retain customers at their current spending levels, your business isn’t sustainable long-term – regardless of how much you upsell.

3. Investor Confidence

Investors use GRR to assess business stability, especially during economic downturns when expansion becomes harder.

4. Foundation for Growth

You can’t build sustainable growth on a leaky bucket. Strong GRR gives you a solid foundation for expansion efforts.

5. Early Warning System

Declining GRR signals problems with product-market fit, customer satisfaction, or competitive positioning.

Gross Revenue Retention vs Net Revenue Retention

Understanding both metrics gives you the complete picture:

Gross Revenue Retention (GRR):

• Measures pure retention
• Excludes expansion revenue
• Maximum of 100%
• Shows baseline customer health

Net Revenue Retention (NRR):

• Measures retention + growth
• Includes expansion revenue
• Can exceed 100%
• Shows overall revenue performance

Example comparison:

• Starting MRR: $100,000
• Churn: -$10,000
• Contraction: -$5,000
• Expansion: +$20,000

GRR = 85% ($85,000 ÷ $100,000) NRR = 105% ($105,000 ÷ $100,000)

Both metrics tell important but different stories about your business.

What Impacts Gross Revenue Retention?

Factors that improve GRR:

• Strong product-market fit
• Excellent customer onboarding
• Proactive customer success
• Regular product improvements
• Competitive pricing
• High switching costs

Factors that hurt GRR:

• Poor customer experience
• Product bugs or reliability issues
• Strong competition
• Economic downturns
• Pricing misalignment
• Inadequate customer support

How to Improve Your Gross Revenue Retention

1. Strengthen Customer Onboarding

• Create clear implementation timelines
• Provide dedicated onboarding support
• Set proper expectations from day one
• Ensure customers see value quickly

2. Invest in Customer Success

• Monitor customer health scores
• Conduct regular business reviews
• Proactively address usage concerns
• Celebrate customer wins and milestones

3. Improve Product Quality

• Fix bugs and reliability issues quickly
• Gather and act on customer feedback
• Invest in user experience improvements
• Ensure product performance meets expectations

4. Optimize Pricing Strategy

• Regularly review pricing vs. value delivered
• Consider grandfathering loyal customers
• Offer flexible payment terms
• Align pricing with customer outcomes

5. Build Switching Costs

• Integrate deeply with customer workflows
• Create valuable data and analytics
• Develop custom configurations
• Build network effects where possible

When to Focus on GRR vs NRR

Focus on GRR when:

• You have high churn rates
• NRR looks good but you suspect underlying issues
• You’re in a competitive market
• Economic conditions are challenging
• You need to prove business stability to investors

Focus on NRR when:

• GRR is strong (85%+ for your segment)
• You want to drive growth from existing customers
• You’re optimizing upsell/cross-sell programs
• You’re seeking growth-stage funding

Best practice: Track both metrics. GRR shows your foundation, NRR shows your growth potential.

Common GRR Mistakes to Avoid

• Ignoring GRR because NRR looks good – Expansion can hide serious retention problems
• Comparing across different customer segments – SMB and enterprise have very different benchmarks
• Not tracking cohort-based retention – Aggregate numbers can hide trends
• Focusing only on churn, not contraction – Downgrades matter too
• Using inconsistent time periods – Stick to monthly or annual measurements

Industry Benchmarks by Company Type

Public SaaS Companies:

• Median GRR: ~90-93%
• Top quartile: 95%+

Private SaaS Companies:

• Median GRR: ~88-92%
• Varies significantly by ACV and market

By Average Revenue Per Account (ARPA):

• High ARPA ($500+ per month): 90%+ target
• Medium ARPA ($50-500 per month): 80-90% target
• Low ARPA (Under $50 per month): 60-80% target

Key Takeaways

Gross Revenue Retention is your business stability meter. While NRR gets more attention for showing growth, GRR reveals the health of your foundation.

Remember:

• GRR can never exceed 100% (unlike NRR)
• Higher-value customers typically have better GRR
• Strong GRR makes expansion efforts more effective
• Declining GRR is an early warning of bigger problems

The bottom line: You can’t build a sustainable SaaS business on a foundation of poor retention. Get your GRR right first, then focus on expansion.

Strong GRR gives you the stability to weather economic storms and the foundation to build profitable growth.

Frequently Asked Questions