What is the formula to calculate net revenue retention?

The formula to calculate net revenue retention is starting MRR plus the change in MRR divided by Starting MRR. Starting MRR (or ARR) is MRR/ARR from the previous period. Change in MRR/ARR is the change in MRR/ARR from upsells, downgrades, and customer churn.

What is the formula to calculate gross revenue retention?

The formula to calculate gross revenue retention is churn MRR plus downgrade MRR divided by starting MRR. Downgrade and churn MRR/ARR are your Starting MRR/ARR values minus downgrade and churn (or customer attrition) amounts from your customer sets.

What is the difference between gross and net revenue retention?

Your net revenue retention rate (NRR) uses changes in ARR/MRR (including upsells, downgrades, churn, and renewals) to show revenue growth from your existing customer base. It helps you understand the momentum of your SaaS business and its path to overall profitability. Gross revenue retention (GRR) doesn’t factor in expansion revenue, instead focusing solely on downgrades, non-renewals, and revenue churn rate. That means GRR is a more conservative metric that can never exceed 100 percent (unlike NRR, which should ideally be well over 100 percent).

How do you increase net revenue retention?

Increasing net revenue retention is all about thinking beyond new business bookings to focus not just on how you retain customers — but also on how you continue to earn more money from your customer base year after year. There are many different ways that SaaS companies can achieve a higher NRR, including: Improving overall logo retention by investing in customer success, mapping product roadmaps to customer pain points, and improving support experiences. Updating your SaaS pricing strategy to better align with the value you provide to customers and include natural expansion and upsell opportunities at renewal. Revising go-to-market strategies to focus more resources on customer segments that have higher net revenue retention rates (i.e., certain industries, companies demographics, product lines, etc.). Gaining deeper insight into relevant metrics like LTV and CAC so leadership can assess product-market fit and make more proactive strategic decisions.

What is net dollar retention?

Net dollar retention (NDR), which is another term for net revenue retention (NRR), is a metric that measures changes in recurring revenue between two different periods. Businesses can calculate NDR on a monthly basis using monthly recurring revenue (MRR) as the base metric, or on an annual basis using annual recurring revenue (ARR) as the base metric.