NRR vs. GRR, how to calculate both, and what actually drives them.
Short answer: Net revenue retention (NRR) is the percentage of recurring revenue you keep from an existing group of customers over a period, after churn, contraction, and expansion. Gross revenue retention (GRR) is the same measure without expansion. GRR tells you how well you keep the revenue you have. NRR tells you whether your existing customers are a growth engine.
Every B2B company reports NRR.
Far fewer can explain where next year’s number is coming from.
That’s the gap this page is about. First the definitions. Then what actually moves them.
Start with the recurring revenue from a fixed group of customers at the beginning of a period. Then account for everything that happened to that same group:
NRR = (Starting ARR + Expansion − Contraction − Churn) ÷ Starting ARR
New customers are excluded. NRR only measures the customers you already had.
GRR = (Starting ARR − Contraction − Churn) ÷ Starting ARR
GRR leaves expansion out on purpose. It can never be higher than 100%, because it only measures what you kept.
A company starts the year with $10M in ARR from its existing customers. Over the year, that group:
| Measure | Calculation | Result |
|---|---|---|
| GRR | ($10M − $0.3M − $0.7M) ÷ $10M | 90% |
| NRR | ($10M + $1.5M − $0.3M − $0.7M) ÷ $10M | 105% |
An NRR of 105% looks healthy. A GRR of 90% says 10% of the base walked out the door, and expansion covered it.
That’s why you need both.
| Gross revenue retention (GRR) | Net revenue retention (NRR) | |
|---|---|---|
| What it measures | Revenue kept from existing customers | Revenue kept and grown from existing customers |
| Includes expansion | No | Yes |
| Can exceed 100% | No | Yes |
| What it reveals | Whether customers stay and stay whole | Whether the base is a growth engine |
| Where it’s mostly won | Early: Kickoff, Onboarding, First Value | Later: alignment, insights, internal advocacy, expansion |
| The risk of watching it alone | Hides whether you’re growing | Hides churn that expansion is covering |
Benchmarks vary by segment, but across B2B SaaS the picture is consistent:
Sources: SaaS Capital (2025), ChartMogul Subscription Growth Benchmark (2024), Optifai NRR Benchmark (2026), High Alpha 2024 SaaS Benchmarks Report.
A benchmark tells you where you stand. It doesn’t tell you why.
Here’s the problem with managing NRR directly.
By the time NRR moves, the work that produced it happened months ago.
GRR is mostly decided early. If a customer never reaches First Value, never has a structured Kickoff, and never agrees on what success looks like, you will not keep them. Low GRR is almost always a first-90-days problem.
NRR is mostly decided later. Alignment Meetings. Sharing insights the customer can use. Developing an internal champion who can make the case for a bigger investment.
Companies running NRR above 110% aren’t having better renewal conversations. They’re running better operating rhythms in months four through ten.
NRR is visible at renewal. It’s caused much earlier.
NRR isn’t a metric you manage. It’s the output of a system you run.
Treat the revenue behind it like a pipeline.
Every customer creates a renewal opportunity at purchase. Expansion opportunities join as specific growth possibilities emerge. Each one moves through five stages (Identify, Align, Advocate, Intent, and Net Revenue Close) only when customer evidence supports the move.
That turns NRR from a number you report into a number you can see coming. The renewals are the floor. The expansions are the growth.
The Post-Sale Pipeline explains how the stages, evidence, and probabilities work. How to Forecast Renewals walks through the renewal side step by step.
A lot more than most companies model.
When NRR rises, the share of your growth target that new logos have to carry falls. At $20M in ARR with a 20% growth goal, moving NRR from 100% to 110% cuts the new-logo ARR you need in half, from $4M to $2M.
And retained revenue is cheaper. Companies spend roughly $2 in sales and marketing to win $1 of new ARR, versus about $1 for $1 of expansion. (Benchmarkit 2025 SaaS Performance Metrics, with Pavilion.)
The Retention & Growth ROI Calculator models what a change in NRR does to your growth rate, sales burden, and exit value.
The percentage of recurring revenue you keep from an existing group of customers over a period, after churn, contraction, and expansion. New customers are excluded.
GRR measures the revenue you keep. NRR measures the revenue you keep plus expansion. GRR can’t exceed 100%. NRR can.
Median NRR across venture-backed B2B SaaS is about 106%, and top-quartile companies exceed 120%. Below 100% means the existing base is shrinking.
GRR is mostly decided early, by whether customers reach First Value. NRR is mostly decided later, by alignment, insights, and internal advocacy that create the conditions for expansion.
Manage each renewal and expansion as an opportunity in a post-sale pipeline, staged on customer evidence. The renewals are the floor. The expansions are the growth.