What is Gross Revenue Retention (GRR)?
Gross Revenue Retention (GRR) measures the percentage of recurring revenue you keep from your existing customer base over a period, after accounting for downgrades and churn but excluding any expansion revenue from upsells or cross-sells.
It shows how resilient your ARR or MRR is without relying on new customers or expansion, making it a core input into cohort analysis, SaaS unit economics, and long-term valuation.
Formula
Core components:
- Starting Recurring Revenue – ARR/MRR from existing customers at the beginning of the period.
- Revenue Lost to Downgrades – contraction from customers moving to cheaper plans or reducing committed usage.
- Revenue Lost to Churn – recurring revenue lost when customers cancel or fail to renew.
Gross Revenue Retention formula:
Interpretation tips:
- >95%: strong revenue durability and high-quality recurring revenue.
- 90–95%: acceptable but watch cohorts and segments closely.
- <90%: at-risk retention profile that will drag CAC payback, cash flow, and enterprise value unless fixed.
Example
Imagine a SaaS company reviewing GRR over the last quarter:
- Starting recurring revenue from existing customers: $120,000
- Revenue lost to downgrades: $9,000
- Revenue lost to churn: $6,000
- Compute revenue retained from existing customers:
– Retained revenue = $120,000 − $9,000 − $6,000 = $105,000
- Plug into the GRR formula.
- Read the result:
– The company retains 87.5% of starting recurring revenue from the existing customer base.
– $105,000 is retained, while $15,000 is lost to downgrades and churn, indicating an 80–90% “at-risk” retention profile that needs action on onboarding, customer success, and product stickiness.