What GRR measures
GRR (Gross Revenue Retention) measures how much of a cohort's starting revenue remains after churn and downgrades, excluding expansion. It is a clean read of durability.
GRR formula
GRR = (starting MRR - contraction - churn) / starting MRR
How to calculate GRR (step-by-step)
- Pick a cohort and a time window (monthly or quarterly).
- Measure starting MRR for the cohort at the beginning of the window.
- Measure contraction MRR and churned MRR for the cohort during the window.
- Compute ending gross MRR = starting - contraction - churn.
- Compute GRR = ending gross MRR / starting MRR.
Why GRR matters
- NRR can be strong due to expansion even when underlying churn is weak.
- GRR exposes churn and downgrades directly (durability without expansion).
- Improving GRR usually improves payback, valuation multiples, and predictability.
Common mistakes
- Including expansion (GRR excludes it by definition).
- Not segmenting by customer size or plan (blended GRR hides churn pockets).
- Mixing billing/cash timing with recurring revenue movements.