What is Gross Revenue Retention? Formula, In-Depth Explanation, Benchmarks, & NRR Comparison

What GRR means for your SaaS business?

There are several reasons why SaaS companies frequently track GRR. For starters, the metric is a clear indication of how churn is impacting your company’s revenue. A good GRR rate means that your company is retaining an acceptable amount of recurring revenue and isn’t losing much to subscription downgrades and cancellations.  

Because GRR is focused on the impact of churn, investors analyze it to spot any churn issues in high growth companies – something that net revenue retention (NRR) can hide if the company has a great land and expand sales motion.

Investors also tend to focus on GRR because it’s a reliable measure of the long-term health of a company. They want to see that your customers are continuing to buy from you (i.e, renew their contracts). Customer stickiness translates into a predictable growth rate that can be used to forecast the future success of your business using SaaS metrics-based planning.

How do you calculate gross revenue retention?

Because GRR is a measure of customer retention, it is calculated for a specific cohort of customers, which is comprised of all the customers you have at the start of whatever time period you’re evaluating. This is important because the number of customers you have at any given time is dynamic. Therefore, the only way you can measure customer retention is to select a cohort of customers and track the retention of that cohort over time.  

Below is the formula to calculate gross revenue retention. Note that the ARR values in the equation should all be from the same cohort (the same set of customers).

It’s important to understand the terms in the gross retention formula:

• Annual Recurring Revenue (ARR) = The total amount of recurring revenue in a particular 12-month period.
• Churn ARR = Loss of revenue from subscription cancellations during the same 12-month period.
• Contraction ARR = Loss of revenue from subscription downgrades during the same 12-month period.

Let’s walk through an example:  

The highest possible value for GRR is 100%. As you can see in the formula above, GRR takes the recurring revenue from a fixed set of customers at the start of a period, then subtracts what those customers churned and what they downgraded. 

Expansion is deliberately excluded. So the numerator can only ever be equal to or smaller than the denominator, which represents 100% of the revenue at the start of the period. In contrast, NRR uses the same starting base but adds expansion back in, which is why it can exceed 100%.

The only thing that can push revenue retention higher than 100% is expansion revenue, and that has been left out of the GRR calculation by design, which is the whole point of the metric. Since expansion can't inflate it, GRR shows how much of your base you hold without help from upsells.

What is a good gross revenue retention rate?

Now that we understand why it’s important to calculate GRR and how to do that, let’s tackle the next question: What is a good GRR for SaaS?  

GRR benchmarks for different segments, defined by ARR and ACV

According to Benchmarkit’s 2026 B2B SaaS & AI-Native Metrics report, the following median gross revenue retention rates based on ARR: 

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The report also highlighted GRR grouped by annual contract value (ACV):

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Reading GRR next to NRR 

GRR is what you keep after churn and downgrades. NRR adds expansion back in. The gap between them tells you how much of your growth comes from existing customers. The tables below compare NRR and GRR based on data provided in the Benchmarkit study. The first table compares the two metrics for segments based on ARR, and the second table compares them for segments based on ACV.

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Notice that the gap between NRR and GRR varies widely by segment, from 12-20 points. This shows that two segments with nearly identical NRR can have very different GRR. while one keeps far more of its existing revenue than the other. 

In the ARR table, the gap between the two metrics narrows as companies get larger, suggesting that bigger companies lean less on expansion to hold their position. 

By ARR, the $5M mark is the dividing line. Companies under $5M average 94% NRR, so  expansion doesn't cover their losses. Above $5M, every cohort exceeds 100% NRR, but no cohort holds its base without expansion. GRR runs 76% to 89% across the table, which suggests that even the strongest performers lose at least a tenth of their existing revenue each year. 

In the ACV table, segments with ACVs below $25K fall short of 100% NRR, which means  expansion doesn't cover what they lose. Companies with ACVs above $25K exceeded 100% NRR, meaning expansion more than replaced what they lost. Their existing base grew on its own. 

Recent GRR trends 

The Benchmarkit data shows an overall decline in GRR from 2022 to 2025. During this time, median GRR declined for companies in four of the five size bands and remained flat in the other. A decline this broad suggests conditions affecting the entire market as opposed to any particular market segment. 

One caveat to keep in mind when evaluating these trends is that gross retention measures only what a cohort lost from its existing base. It says nothing about growth. Companies in these cohorts may well have expanded overall once upsell, cross-sell, and new logos were counted. 

The SaaS CFO, Ben Murray, explores this GRR decline in depth in a recent article, attributing  the decline to two demand-side forces, both AI-driven.

According to Murray, AI alternatives have reset renewal conversations: customers are trimming the number of tools they run and questioning any vendor whose value looks replaceable by an AI-native product. And, that pressure manifests as harder negotiations, tier downgrades, and stalled expansion rather than outright cancellation. In addition, AI has allowed customers to operate with smaller headcount. As a result, seat-based contracts renew at a lower value, not because customers are unhappy. They just need fewer seats. 

Murray also notes a rising dependency on expansion, adding that this dependency makes a company’s growth posture more fragile because it masks the decline in GRR.  

How to maximize GRR?

Maximizing GRR is a critical task at every SaaS company. By enhancing customer experience, businesses will see an increase in customer loyalty, and hence, retained revenue. Let’s discuss some ways to boost your GRR:

• Improve the onboarding experience for customers – If you don’t educate and set expectations right out of the gate, you’re setting your customers up for frustration and disappointment. Reach out to them quickly, identify what their priorities are, and address them. Remember, first impressions matter!
  
• Invest in customer success – While it can vary, a good rule of thumb is to invest 1-2% of your revenue into customer success. This will pay off  once your customers learn that they can count on you to provide products/services of value along with exceptional service.
  
• Build and optimize your processes – As your SaaS company scales, its processes will help your employees deliver consistent experiences to your customers. They will enable your internal teams to repeatedly deliver high-quality products/services that your customers can depend on.