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Master the essential revenue and financial metrics that drive B2B SaaS success. From ARR and MRR to retention metrics and customer economics, these terms are critical for understanding pipeline health, forecasting growth, and making data-driven decisions.
Gross Revenue Retention (GRR)
Short Definition
Gross Revenue Retention (GRR) measures how much recurring revenue you keep from your current customers, ignoring any growth from those customers. It answers the question, “If my existing customers only renewed at their current or lower spend and never expanded, what percentage of revenue would I keep?”
GRR includes the impact of logo churn (customers leaving entirely) and contraction (customers downgrading or reducing usage), but it deliberately excludes expansion revenue. This makes it a pure “defense” metric that reflects product stickiness, onboarding quality, and customer success effectiveness, independent of upsell performance.
How to Calculate
GRR is calculated by taking starting recurring revenue from an existing cohort, subtracting churn and contraction from that cohort over the period, and dividing by the starting amount.
Core Formula (ARR-based)
GRR = (Beginning ARR − Churn ARR − Contraction ARR) ÷ Beginning ARR
Then multiply by 100 to express as a percentage.
Where…
- Beginning ARR: Recurring revenue from the existing customer cohort at the start of the period
- Churn ARR: Revenue lost from customers who fully cancel
- Contraction ARR: Revenue lost from downgrades or reduced usage within that cohort
- Expansion ARR: Explicitly excluded from GRR
Step-by-Step Calculation
- Pick a cohort (e.g., all active customers on Jan 1) and sum their ARR or MRR at that date.
- Over the chosen period (month, quarter, or year), track only that cohort’s churn and contraction.
- Subtract churn and contraction from the beginning ARR.
- Divide by beginning ARR and convert to a percentage.
Example
- Beginning ARR: $1,000,000
- Churn ARR: $50,000
- Contraction ARR: $30,000
GRR = (1,000,000 − 50,000 − 30,000) ÷ 1,000,000 = 920,000 ÷ 1,000,000 = 0.92 ⇒ 92%
An annual GRR of 92% means you lose 8% of recurring revenue from the existing base before considering any upsells.
Why GRR Matters
GRR isolates your ability to keep revenue from current customers, making it one of the clearest indicators of product fit, customer satisfaction, and CS performance. Because GRR excludes expansion, high GRR tells you the “floor” of your recurring revenue even if sales and CS stopped upselling entirely.
Investors and CFOs often look at GRR together with NRR:
- GRR shows retention quality and revenue stability.
- NRR shows net growth after expansion.
A strong GRR reduces the pressure on new-logo acquisition and expansion to maintain growth, improving predictability and valuation. Poor GRR, even alongside good NRR, can indicate that expansion is masking underlying churn or product issues.
Industry Benchmarks
GRR cannot exceed 100% (you cannot retain more than all starting revenue), and most strong B2B SaaS companies cluster between ~90–95%.
Across B2B SaaS overall, research often finds median GRR around 90–93%. Enterprise vendors selling into more embedded, mission-critical workflows tend to achieve the highest GRR levels.
Real-World Examples
- An SMB SaaS company with 82% GRR and 115% NRR realizes expansion is masking high core churn; they invest in onboarding and in-app guidance to move GRR toward 90%+.
- An enterprise SaaS vendor maintains 95–96% GRR for several years, demonstrating strong stickiness; this stability supports premium valuation multiples despite modest new-logo growth.
- A product team correlates feature adoption to GRR by cohort and finds customers using certain advanced modules have 5–7 point higher GRR, confirming where to focus roadmap and enablement.
Common Mistakes
- Including expansion in GRR: That turns GRR into something closer to NRR and defeats its purpose as a pure retention metric. Expansion belongs only in NRR.
- Mixing in new customers: GRR is cohort-based; including new logos inflates the metric and hides true churn.
- Using customer counts instead of revenue: GRR is revenue-based, not logo-based; losing a few large customers should impact GRR more than losing many tiny ones.
- Basing on total revenue instead of recurring revenue: Including large services or one-time fees can make GRR noisy and less comparable period over period.
The fix is a clear RevOps definition (ARR/MRR only, existing cohort only, no expansion), standardized reporting, and pairing GRR with NRR and churn rate for a complete picture.
FAQs
What is the main difference between GRR and NRR?
GRR measures how much recurring revenue you keep from a cohort after churn and downgrades, excluding expansion; NRR includes expansion, showing net growth or decline from that cohort. NRR can exceed 100%, GRR cannot.
What is a good GRR for B2B SaaS?
Roughly 90%+ is a common benchmark; 95%+ is considered very strong, especially in enterprise segments. SMB-focused businesses may see lower GRR due to higher market churn.
Should GRR be calculated monthly or annually?
Many companies monitor GRR monthly or quarterly for signals but primarily report and benchmark it on an annual basis, since annual GRR smooths short-term volatility.
How does GRR influence sales and CS strategy?
Weak GRR indicates issues with onboarding, product fit, or customer success; leadership may adjust ICP, CS coverage models, and renewal playbooks. Strong GRR allows more aggressive investment in expansion and new-logo acquisition, knowing the base is stable.
Last Updated: December 8, 2025
Reviewed by: Ben Hale