What this number actually tells you
Use the same recurring-revenue unit for every input. Monthly recurring revenue is common, but annual recurring revenue also works when every movement covers the same annual period.
Calculating NRR and GRR together separates growth inside the customer base from the revenue the business kept before expansion. The gap between the two is created by expansion from existing customers.
Use the formula you can reproduce next month
Net revenue retention
NRR = ((Starting recurring revenue + Expansion - Contraction - Churn) / Starting recurring revenue) x 100
NRR includes positive and negative recurring-revenue movement from customers who were active at the start of the period.
- Starting recurring revenue: Recurring revenue attached to customers active at the beginning of the measurement period.
- Expansion recurring revenue: Additional recurring revenue from customers in the starting base, such as upgrades, add-ons, more seats, or higher recurring usage under the stated policy.
- Contraction recurring revenue: Recurring revenue lost when a customer in the starting base remains active but pays less after a downgrade, seat reduction, or other recurring decrease.
- Churned recurring revenue: Recurring revenue lost when customers in the starting base cancel or fail to renew under the stated churn policy.
Gross revenue retention
GRR = ((Starting recurring revenue - Contraction - Churn) / Starting recurring revenue) x 100
GRR measures how much of the starting recurring-revenue base remained before expansion. It cannot exceed 100 percent under this formula.
- Lost recurring revenue: All downgrade and cancellation revenue lost from the starting customer base during the period.
Expansion rate
Expansion rate = (Expansion / Starting recurring revenue) x 100
The expansion rate shows positive recurring-revenue movement from the starting customer base as a share of its starting value.
Gross revenue churn rate
Gross revenue churn rate = ((Contraction + Churn) / Starting recurring revenue) x 100
Gross revenue churn combines downgrade and cancellation losses before any expansion offsets them.
Net revenue churn rate
Net revenue churn rate = 100 - NRR
Net revenue churn is negative when expansion exceeds contraction and churn. That result is often called negative net revenue churn.
NRR and GRR worked example
A SaaS company starts the month with $100,000 in monthly recurring revenue from its existing customers.
- Starting MRR: $100,000
- Expansion MRR: $8,000
- Contraction MRR: $3,000
- Churned MRR: $5,000
NRR = (($100,000 + $8,000 - $3,000 - $5,000) / $100,000) x 100 = 100%
GRR = (($100,000 - $3,000 - $5,000) / $100,000) x 100 = 92%
Expansion rate = ($8,000 / $100,000) x 100 = 8%
Gross revenue churn rate = (($3,000 + $5,000) / $100,000) x 100 = 8%
The existing customer base ended flat after expansion offset all contraction and churn, so NRR is 100 percent. GRR is 92 percent because it shows the eight percent loss before expansion.
Keep the measurement boundary clean
Build both retention metrics from one fixed starting cohort and one recurring-revenue policy.
Include
- Recurring revenue from customers active at the start of the period.
- Upgrades, cross-sells, add-ons, seat growth, and other recurring expansion from that starting cohort.
- Downgrades, seat reductions, discounts, and other recurring contraction from that starting cohort.
- Cancellation and nonrenewal revenue lost from that starting cohort.
Exclude
- Recurring revenue from customers acquired after the period began.
- One-time implementation, services, setup, hardware, tax, or pass-through revenue.
- Reactivated-customer revenue unless your documented reporting policy assigns it to the starting cohort. Many teams report reactivation separately.
- Revenue movements from a different period, currency, product set, or customer segment.
Read the result before you react to it
Read NRR and GRR as a pair, then inspect the accounts that created each movement. The direction and composition of the change matter more than a universal grade.
NRR is above 100 percent
Expansion from the starting customer base was greater than contraction and churn during the selected period.
Next checkCheck whether expansion is broad across the base or concentrated in a few accounts, then review GRR for hidden loss.
NRR is exactly 100 percent
Expansion offset contraction and churn, leaving the starting customer base flat in recurring-revenue terms.
Next checkSeparate the expansion, contraction, and churn accounts rather than treating the flat net result as no movement.
NRR is below 100 percent
The starting customer base ended the period with less recurring revenue after all included movements.
Next checkDetermine whether cancellation, downgrade, or weak expansion created the gap and assign the affected accounts for review.
The gap between NRR and GRR is large
Expansion is doing substantial work to offset loss in the starting revenue base.
Next checkReview the durability and concentration of expansion while separately investigating churn and contraction.
What the simple model cannot settle
NRR and GRR are reporting metrics, not explanations. They do not identify which accounts moved or why.
Expansion can offset broad contraction or churn in NRR, so review GRR and the underlying customer movements at the same time.
A blended result can hide large differences by segment, plan, company size, tenure, or acquisition cohort.
The result depends on a consistent definition of recurring revenue, churn date, contraction, and reactivation.
These formulas do not replace revenue-recognition, currency-conversion, or audited financial-reporting policies.
Questions that change the calculation
What is net revenue retention?
Net revenue retention, or NRR, is the percentage of recurring revenue retained from a starting customer base after expansion, contraction, and churn. It excludes revenue from new customers acquired during the period. Net dollar retention usually refers to the same calculation.
What is the difference between NRR and GRR?
NRR includes expansion from existing customers. Gross revenue retention, or GRR, excludes expansion and only reflects recurring revenue kept after contraction and churn. That is why NRR can exceed 100 percent while GRR cannot under the standard formulas used here.
Does new-customer MRR count in NRR?
No. NRR follows customers who were active at the start of the period. Revenue from customers acquired after the period began belongs in new MRR and the full MRR bridge, not in NRR or GRR.
Should reactivation count in NRR?
There is more than one reporting convention. Some teams include reactivation when the customer belongs to the defined starting cohort, while others report it as a separate MRR movement. Choose a policy, disclose it, and use it consistently. This calculator excludes reactivation from the NRR input.
Can I calculate annual NRR with monthly recurring revenue?
Yes. Use starting MRR from the beginning of the twelve-month period and all expansion, contraction, and churn MRR from that same starting cohort across the period. Do not average twelve separate monthly NRR percentages to produce annual NRR.
The retention rate is the outcome. The account movements are the work.
NRR and GRR can show whether expansion covered contraction and churn. They cannot show which accounts are likely to move next. Prevenue connects billing, product, and account evidence so teams can review the Grow, Save, and Watch actions behind the aggregate number.
See how the Prevenue Revenue Signals Platform turns account evidence into governed next actions while humans keep control.