SaaS metrics

Gross revenue retention (GRR)

Gross revenue retention measures how much recurring revenue you keep from existing customers over a year, counting only churn and downgrades and ignoring expansion.

Parag Jain, CPA
Parag Jain, CPAFounder, Zinance·Last updated July 2026
Summarize this article

Key takeaways

  1. GRR = (Starting ARR − Contraction − Churn) ÷ Starting ARR
  2. Good: 90%+; enterprise best-in-class: 95%+
  3. GRR is where investors look first because expansion can mask a churn problem in NRR.

What is gross revenue retention (GRR)?

Gross revenue retention measures how much recurring revenue you keep from existing customers over a year, counting only churn and downgrades and ignoring expansion. It caps at 100%, so it strips out upsell and exposes your true retention floor. It's the cleanest read on churn health.

Formula

Formula

GRR = (Starting ARR − Contraction − Churn) ÷ Starting ARR

  • Starting ARRRecurring revenue from the cohort at period start
  • ContractionDowngrades and reduced seats
  • ChurnARR lost from cancelled customers

Worked example

Start with $2M ARR, lose $80K to downgrades and $180K to churn. GRR = ($2M − $80K − $180K) ÷ $2M = 87%. Expansion never enters the calculation, so GRR can't exceed 100%.

Benchmarks by stage

Median GRR is ~90%; bootstrapped SaaS at $3–20M ARR shows a median of 92% per SaaS Capital; below 85% flags product or CS issues.

Source: SaaS Capital (2025)

Why it matters for fast-growing companies

GRR is where investors look first because expansion can mask a churn problem in NRR. A high NRR with low GRR means a few whales are carrying a leaky base, which is fragile if one account leaves. Strong GRR proves product-market fit is sticky.

SaaS metricsNet revenue retention (NRR)Net revenue retention measures how much recurring revenue you keep from existing customers over a year, including expansion and after subtracting downgrades and churn.SaaS metricsMRR and ARRMRR (monthly recurring revenue) and ARR (annual recurring revenue) both measure predictable subscription revenue; ARR is simply MRR × 12.Unit economicsCustomer lifetime value (LTV)Customer lifetime value is the total gross profit a startup expects to earn from one customer across their entire relationship.Unit economicsCAC payback periodCAC payback period is the number of months it takes to recover the cost of acquiring a customer from their gross-margin revenue.Accounting & closeDeferred revenueDeferred revenue is a liability representing cash collected before the product or service has been delivered.

Frequently asked questions

What is a good GRR?+
A GRR of 90% or higher is strong; enterprise products with high contract values should target 95%+, while SMB-focused SaaS often runs 80–85%. Below 85% usually signals a product, onboarding, or customer-success gap worth investigating before scaling spend.
Why is GRR always below NRR?+
GRR excludes expansion revenue while NRR includes it, so GRR is always equal to or lower than NRR. GRR caps at 100% because you can't retain more than you started with; NRR can exceed 100% when upsell outweighs churn.

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