NRR vs GRR
| Aspect | NRR (Net Revenue Retention) | GRR (Gross Revenue Retention) |
|---|---|---|
| Includes Expansion | Yes (upsells, cross-sells) | No (retention only) |
| Includes Contraction | Yes (downgrades) | Yes (downgrades) |
| Includes Churn | Yes | Yes |
| Can Exceed 100% | Yes (expansion > churn) | No (max 100%) |
| Best Benchmark | >100% (growth without new logos) | >85% (healthy base) |
💡TL;DR
GRR = (Starting MRR - Churn - Contraction) / Starting MRR. Excludes expansion. Max is 100%. NRR = (Starting MRR - Churn - Contraction + Expansion) / Starting MRR. Includes expansion. Can exceed 100%. Benchmarks: GRR >90% (excellent), 85-90% (good), <85% (concerning). NRR >120% (best-in-class), 100-120% (good), <100% (net shrinking). Low GRR with high NRR = growing on a shrinking base (risky).
Definition
GRR (Gross Revenue Retention) measures revenue kept from existing customers, excluding expansion—it shows how well you retain what you have. NRR (Net Revenue Retention) includes expansion revenue (upsells, cross-sells), showing total revenue change from existing customers. GRR reveals churn health; NRR reveals growth potential.
🏢What This Means for SMB Teams
SMB SaaS typically has lower GRR (80-85%) due to small business volatility. Focus on GRR first—you can't upsell customers who churn. A 5-point GRR improvement often has more impact than expansion programs.
Track MRR, churn, CAC payback—AI acts when metrics slip.
Metrics that matter, actions that move them.
📋Practical Example
A 60-person vertical SaaS ($12M ARR) had impressive 115% NRR but only 78% GRR. This meant they were losing 22% of customers annually but masking it with aggressive upselling to survivors. When two large accounts churned unexpectedly, quarterly growth went negative. They rebalanced: reduced expansion focus, added health scoring, implemented 60-day churn prevention plays. After 8 months: GRR improved to 88%, NRR stabilized at 108%, and growth became more predictable.
🔧Implementation Steps
- 1
Calculate GRR monthly: (Starting MRR - Churn - Contraction) / Starting MRR.
- 2
Calculate NRR monthly: add Expansion to GRR numerator.
- 3
Track both by segment: enterprise customers often have higher GRR, SMB lower.
- 4
Set alerts: GRR <85% triggers immediate churn investigation.
- 5
Balance goals: don't let NRR targets overshadow GRR health.
❓Frequently Asked Questions
Which metric do investors care about more?
Both matter, but for different reasons. NRR >100% shows you can grow without new logos (efficient). GRR >90% shows the base is healthy (sustainable). Investors worry when NRR is high but GRR is low—it suggests hidden churn risk.
How do I improve GRR without sacrificing NRR?
Focus on product-led retention: better onboarding, usage monitoring, and proactive support. These reduce churn without requiring sales effort, preserving capacity for expansion. Often, retained customers are also easier to upsell.
⚡How Optifai Uses This
Optifai calculates both NRR and GRR automatically from billing data, segmented by customer tier, industry, and cohort. Alerts fire when GRR drops below thresholds, and dashboards show the gap between NRR and GRR as a risk indicator.
📚References
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Related Terms
NRR (Net Revenue Retention)
The percentage of recurring revenue retained from existing customers after accounting for expansion, contraction, and churn. NRR = (Starting MRR + Expansion - Contraction - Churn) ÷ Starting MRR × 100. NRR >100% means you grow even without new customers.
GRR (Gross Revenue Retention)
The percentage of recurring revenue retained from existing customers, excluding expansion revenue. GRR = (Starting MRR - Churned MRR - Contraction MRR) / Starting MRR. Unlike NRR, GRR cannot exceed 100% because it only measures retention, not growth.
Logo Churn vs Revenue Churn
Two related but distinct churn metrics. Logo Churn (customer churn) measures the percentage of customers who cancel. Revenue Churn measures the percentage of revenue lost to cancellations and downgrades. They often differ significantly based on which customer segments churn.
Expansion Revenue
Additional recurring revenue from existing customers through upsells (higher tier), cross-sells (additional products), or seat expansion. Expansion Revenue = Ending MRR from Existing Customers - Starting MRR from Same Customers (excluding churn).
Churn Risk Signals
Behavioral indicators that predict customer churn before it happens. Common signals include: declining login frequency, reduced feature usage, support ticket spikes, NPS score drops, billing page visits, and engagement with competitor content. Early detection enables proactive intervention.