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Understand the key difference between NRR vs GRR and learn how both metrics impact SaaS growth, customer retention, and long-term revenue stability.
Think of your company’s revenue like a building. Gross Revenue Retention (GRR) is the solid foundation. It tells you how stable your core structure is by measuring how much revenue you keep from existing customers, ignoring any new additions. A strong foundation means your product is sticky and your customers are happy. Net Revenue Retention (NRR), on the other hand, is your potential to build new floors. It includes expansion revenue, showing your capacity for growth within your customer base. The discussion around NRR vs GRR isn't about which is better; it's about understanding that you can't build higher without a stable base.
When you're running a subscription business, attracting new customers is only half the battle. The real key to sustainable growth lies in keeping the customers you already have and increasing their value over time. This is where Net Revenue Retention (NRR) and Gross Revenue Retention (GRR) come in. These two metrics are vital for understanding the health and stability of your revenue.
Think of them as two different lenses for viewing your customer base. One shows you the big picture of revenue growth from existing customers, while the other zooms in on your ability to hold onto your core revenue. Understanding both gives you a powerful diagnostic tool to see what’s working and where you need to focus your efforts. Let's break down what each one tells you.
Net Revenue Retention (NRR) measures how much recurring revenue you’ve held onto from existing customers over a specific period, factoring in all the changes. It answers the question: "Are we growing revenue from the customers we already have?" NRR includes revenue you've gained from upgrades and cross-sells (expansion revenue) and subtracts revenue you've lost from customers canceling (churn) or downgrading their plans. An NRR over 100% is the gold standard, as it means your expansion revenue is more than making up for any revenue you've lost. It’s a powerful indicator of a healthy, growing business with a product that customers want more of.
Gross Revenue Retention (GRR) offers a more focused look at your revenue stability. It measures your ability to retain revenue from existing customers, but it only accounts for losses from churn and downgrades. GRR intentionally ignores any expansion revenue from upsells or cross-sells. This makes it a pure measure of your product's stickiness and your customers' satisfaction with your core offering. A high GRR shows that your customers are consistently seeing value and sticking around, which provides a stable foundation for your business. It can't be inflated by a few large customer upgrades, so it gives you a clear, honest look at your retention.
Tracking both NRR and GRR is essential because they tell two different but equally important stories about your company's health. A high GRR signals that your core revenue is stable and your customers are happy. A high NRR shows that you're successfully growing accounts and increasing their lifetime value. Looking at them together provides valuable insights into customer behavior and product performance. For example, a high NRR but a low GRR might mean you're great at upselling but are losing too many customers along the way. Using both metrics helps you make informed strategic decisions to build a truly resilient business.
Getting a handle on your Net Revenue Retention (NRR) and Gross Revenue Retention (GRR) starts with understanding the math behind them. While the formulas might seem similar at first glance, their small differences tell very different stories about your business's health and customer loyalty. The key is to track each component accurately so you can trust the results. Let's break down how to calculate both metrics, step by step.
Net Revenue Retention gives you the big picture of your revenue from existing customers. It accounts for all the changes within your customer base, including revenue you've gained from upsells and lost from downgrades or cancellations. A healthy NRR is often above 100%, which signals that your revenue from existing customers is growing even after accounting for churn. You can find more helpful breakdowns of key financial metrics on our HubiFi blog.
To calculate NRR, use this formula:
[(Starting MRR + Expansion MRR - Downgrade MRR - Churned MRR) / Starting MRR] x 100
For example, if you started with $10,000 MRR, gained $2,000 in expansion, and lost $500 to downgrades and $1,000 to churn, your NRR would be 105%.
Gross Revenue Retention offers a more focused look at your ability to hold onto revenue. It intentionally ignores any expansion revenue from upsells or cross-sells. This metric tells you how much of your existing revenue you’re retaining from one period to the next, making it a pure measure of customer retention and satisfaction. Because it doesn't include expansion, your GRR can never be more than 100%. A high GRR indicates a stable, loyal customer base.
Here’s the formula for GRR:
[(Starting MRR - Downgrade MRR - Churned MRR) / Starting MRR] x 100
Using the same numbers as before, if you started with $10,000 MRR and lost $500 to downgrades and $1,000 to churn, your GRR would be 85%.
To calculate NRR and GRR accurately, you need to have a solid grasp of each component. Pulling this data correctly often depends on having your financial systems in sync. Reliable data integrations are essential for ensuring your numbers are trustworthy.
Here are the core components you'll be working with:
At first glance, Net Revenue Retention (NRR) and Gross Revenue Retention (GRR) seem pretty similar. They both measure how well you’re holding onto revenue from existing customers. But the small difference in how they’re calculated reveals two very different stories about your business's health and potential. Understanding this distinction is key to getting a clear picture of your company’s performance and making smarter decisions for growth. Let's break down what sets them apart and why you need to pay attention to both.
The biggest difference between NRR and GRR comes down to one thing: expansion revenue. Net Revenue Retention (NRR) factors in all the revenue changes from your existing customer base. This includes churn and downgrades, but it also counts the positive impact of upgrades, cross-sells, and add-ons. In short, NRR shows you the net effect of all customer revenue activity.
Gross Revenue Retention (GRR), on the other hand, only measures your ability to retain your existing recurring revenue. It purposefully excludes any expansion revenue. Think of it as a pure measure of retention—it tells you how much of last period’s revenue you held onto, without the boost from upsells. This makes GRR a powerful indicator of your baseline customer satisfaction and product value.
Because GRR ignores expansion revenue, it acts as a powerful early-warning system for churn. If your GRR is dropping, it’s a clear sign that customers are either leaving or downgrading their plans. This metric cuts through the noise and gives you an honest look at customer satisfaction and product stickiness. A low GRR can signal underlying issues with your product, onboarding process, or customer support that need immediate attention.
NRR can sometimes hide these problems. You could have a healthy NRR over 100% while your GRR is slipping below 90%. This scenario means a handful of happy customers are expanding their accounts and masking the revenue you're losing from a growing number of unhappy ones. This is why understanding the nuances of GRR vs. NRR is so critical for sustainable growth.
Think of GRR as the foundation of your business and NRR as its growth potential. A high GRR shows that your core revenue is stable and your customers are sticking around. It proves you have a solid product that delivers consistent value. This stability is what makes future growth possible. Without a strong foundation, any growth you achieve is built on shaky ground.
NRR shows the overall growth momentum within your existing customer base. An NRR over 100% means your business can grow even without acquiring new customers, which is a powerful signal to investors and stakeholders. Tracking both metrics gives you a complete diagnostic of your company’s health. It helps you make informed strategic decisions about whether to focus on fixing retention issues or capitalizing on expansion opportunities.
So, you have two powerful metrics in front of you. Which one deserves more of your attention? The honest answer is: it depends on what you’re trying to understand about your business. It’s less about choosing a favorite and more about knowing when to look at each one to get the insights you need. Think of GRR and NRR as two different lenses that, when used together, give you a complete picture of your revenue health. One tells you about your stability, while the other speaks to your growth potential. Let's break down when to focus on each.
Think of Gross Revenue Retention as your business's stability check. It answers a critical question: "Are we keeping the revenue we already have?" If your GRR is dipping, it’s a red flag that something is off with your product, customer support, or market fit. It’s the foundational metric because it isolates churn and downgrades, giving you a clear view of customer satisfaction before any upsells enter the picture.
Net Revenue Retention, on the other hand, is your growth indicator. It’s the metric to watch when your goal is to grow revenue from your existing customers. NRR shows if your upsells and cross-sells are successfully outweighing your churn. While a high NRR is exciting, it’s only meaningful if you have a solid GRR to back it up.
A Net Revenue Retention rate over 100% feels like a huge win, and it often is. It means your existing customers are spending more with you over time, which is a fantastic sign of a healthy business. However, relying on NRR alone can be misleading. A high NRR can easily mask a serious churn problem, especially among your smaller customers.
Imagine your NRR is 110%, but it’s because a few enterprise clients signed massive expansion deals. At the same time, you could be losing dozens of smaller accounts every month. This creates a fragile revenue base that’s overly dependent on a handful of clients. If one of those big accounts leaves, your growth evaporates. This is why you can't ignore GRR—it keeps you honest about your overall customer retention.
Ultimately, you need to track both GRR and NRR to make smart, strategic decisions. They work together to tell the full story of your customer revenue. GRR shows the strength of your foundation, while NRR reveals your capacity for growth. Looking at them in tandem helps you diagnose the health of your business and identify where to focus your efforts.
For example, a high GRR but low NRR suggests you’re great at keeping customers but are missing upsell opportunities. Conversely, a low GRR with a high NRR points to a churn problem that’s being hidden by a few big wins. By analyzing both metrics, you get the nuanced insights needed to build a truly sustainable subscription model. And to do that, you need a system that provides accurate, real-time data, which is where HubiFi’s automated solutions come in.
Improving your retention rates isn’t about finding a single silver bullet. It’s about building a customer-centric approach that touches every part of your business. When you consistently deliver value and create a positive experience, higher retention naturally follows. Focusing on a few key areas can make a significant impact on both your NRR and GRR.
Think of it as a cycle: a great product brings customers in, a smooth onboarding process helps them succeed, proactive engagement keeps them happy, and a smart pricing strategy allows them to grow with you. Let’s break down the actionable steps you can take in each of these areas to keep customers around and increase their spending over time.
First impressions matter, and in SaaS, that impression is your onboarding process. A confusing or frustrating start is a fast track to churn. The goal is to get your customers to their "aha!" moment as quickly as possible, where they truly understand the value your product brings to their work. The best strategies to improve Gross Revenue Retention (GRR) focus on keeping your customers involved and happy right from the beginning. A strong customer success program ensures users feel supported and confident. This means providing clear documentation, offering personalized setup assistance, and checking in to make sure they’re hitting their initial goals. When customers see immediate value, they’re far more likely to stick around for the long haul.
Once a customer is successfully onboarded, the work isn’t over. Retention is built on an ongoing relationship, not a one-time transaction. Proactive engagement means you aren’t just waiting for customers to come to you with problems. Instead, you’re consistently providing value and keeping them connected to your product. Share updates about new features, offer webinars that teach them advanced skills, and use data to identify which accounts might be at risk of churning. Tracking metrics like NRR and GRR gives you valuable insights into customer behavior, helping you spot trends and address potential issues before they escalate. This consistent communication shows customers you’re invested in their success, which builds loyalty and trust.
Your product and pricing aren’t static; they should evolve with your customers. This is especially crucial for improving NRR. Maximizing net revenue retention involves creating clear pathways for customers to expand their accounts as their needs grow. This could mean offering tiered pricing plans with more features, add-on modules for specialized functions, or usage-based pricing that scales with them. Listen to customer feedback to guide your product roadmap and ensure you’re building features they’ll actually pay more for. A well-designed SaaS pricing strategy doesn’t just capture value—it creates opportunities for your happiest customers to invest more deeply in your solution, driving expansion revenue.
The most effective way to deal with churn is to prevent it from happening in the first place. This requires you to be a bit of a detective, looking for clues that a customer might be unhappy or disengaged. Since gross revenue retention focuses on avoiding churn, your strategy should center on keeping customers happy and active. Monitor product usage data for significant drops in activity, as this is often a leading indicator of churn. Regularly collect feedback through surveys like the Net Promoter Score (NPS) to gauge sentiment. When you identify an at-risk customer, have a playbook ready to re-engage them, whether it’s through a personalized email, a call from their account manager, or an offer for additional training.
Tracking NRR and GRR is essential for making informed strategic decisions. These metrics offer a window into customer behavior, product performance, and the overall health of your subscription business. But here’s the catch: your NRR and GRR calculations are only as reliable as the data you feed them. If your numbers are pulled from messy, disconnected sources, the insights you get will be skewed at best and misleading at worst.
To truly understand your revenue retention, you need a single source of truth. This means having clean, accurate, and timely data that reflects every upgrade, downgrade, and churn event as it happens. Without this foundation, you’re essentially flying blind, making critical decisions based on a flawed picture of your company's performance. Accurate data isn’t just a nice-to-have; it’s the bedrock of a sustainable growth strategy.
For many businesses, financial data is scattered across multiple platforms—your CRM, billing system, and accounting software all hold different pieces of the puzzle. When these systems don't talk to each other, you're left trying to manually stitch together reports. This process is not only time-consuming but also incredibly prone to human error. A single misplaced decimal or an overlooked subscription change can throw off your entire NRR and GRR calculation. This fragmented approach makes it nearly impossible to get a clear, up-to-the-minute view of your revenue, forcing you to rely on outdated and potentially inaccurate information. Seamless integrations are key to solving this.
In the fast-paced SaaS world, decisions can't wait for month-end reports. You need real-time analytics to see how your business is performing right now. Are customers churning after a recent price change? Are they adopting a new feature you just launched? Real-time data gives you the agility to react quickly. Furthermore, your revenue recognition needs to be compliant with standards like ASC 606. This isn't just about passing audits; it's about having a standardized, trustworthy view of your financials. When your analytics are both real-time and compliant, you can confidently track metrics and make decisions that stand up to scrutiny. You can find more insights on our blog.
Ultimately, the goal of tracking NRR and GRR is to make better business decisions. With accurate, unified data, you can move beyond simply calculating metrics and start using them strategically. Reliable data helps you pinpoint exactly why customers are churning or what drives them to upgrade. Gross Revenue Retention (GRR), for instance, gives you a clear look at the stability of your customer base by showing revenue retained despite churn. When you trust your numbers, you can confidently forecast future revenue, identify at-risk accounts before they leave, and spot opportunities for expansion. This clarity empowers you to build a stronger, more resilient business. If you're ready to see how, you can schedule a demo with our team.
What's considered a "good" score for NRR and GRR? While benchmarks can vary by industry, a great goal for Net Revenue Retention (NRR) is anything over 100%. This signals that your revenue from existing customers is growing, even after accounting for churn. For Gross Revenue Retention (GRR), you want to be as close to 100% as possible. A GRR above 90% is generally considered very healthy, as it shows you have a stable revenue base and a product that customers consistently value.
Can my Gross Revenue Retention (GRR) ever be higher than 100%? No, your GRR can never exceed 100%. The calculation for GRR is designed to measure how much of your starting revenue you've held onto, and it intentionally excludes any new revenue from upgrades or cross-sells. The absolute best you can do is 100%, which would mean you experienced zero customer churn and no one downgraded their plan during that period.
My NRR is over 100%, so why should I even worry about GRR? A high NRR is a fantastic sign, but it can sometimes mask underlying issues. It's possible for a few large customers to expand their contracts significantly, pushing your NRR up while a steady stream of smaller customers are churning out. GRR keeps you honest by giving you a clear picture of your baseline retention. A strong GRR proves that your product is valuable to your entire customer base, not just a few big accounts.
Which metric do investors care about more? Investors pay close attention to both metrics because they tell two different but equally important parts of your company's story. They look at GRR to see if you have a stable, predictable business with a product that customers want to keep using. They then look at NRR to understand your potential for efficient growth. A high NRR is far more impressive when it's built on the foundation of a high GRR.
If I want to improve both metrics, where's the best place to start? The most effective place to begin is with your customer onboarding process. A smooth, supportive, and successful start for new users has a massive impact on long-term retention. When customers quickly understand how to get value from your product, they are far less likely to churn, which directly helps your GRR. Happy, successful customers are also the ones most likely to upgrade their plans later, which will in turn help your NRR.
Former Root, EVP of Finance/Data at multiple FinTech startups
Jason Kyle Berwanger: An accomplished two-time entrepreneur, polyglot in finance, data & tech with 15 years of expertise. Builder, practitioner, leader—pioneering multiple ERP implementations and data solutions. Catalyst behind a 6% gross margin improvement with a sub-90-day IPO at Root insurance, powered by his vision & platform. Having held virtually every role from accountant to finance systems to finance exec, he brings a rare and noteworthy perspective in rethinking the finance tooling landscape.