When it comes to evaluating the health of a business, especially one with a subscription model, two metrics can act as barometers for how well the business maintains its customer relationships. Both of these metrics—net revenue retention (NRR) and gross revenue retention (GRR)—provide important information yet offer different kinds of insight.

Below is an overview of what businesses need to know about NRR and GRR, including what they are, how they differ, and how to use both to assess the overall health of your revenue.

What's in this article?

• What is net revenue retention?
  
• How is net revenue retention calculated?
  
• What is gross revenue retention?
  
• How is gross revenue retention calculated?
  
• Net revenue retention vs. gross revenue retention
  
• What are good benchmarks for net revenue retention and gross revenue retention?
  
• What’s the difference between net revenue retention and net dollar retention?
  
• How to improve net revenue retention and gross revenue retention
  
• How Stripe Sigma can help
  
• How Stripe Data Pipeline can help
  

What is net revenue retention?

Net revenue retention is a metric that reflects a company’s ability to retain and grow revenue from its existing customer base over a given time period. This metric provides insight into a business’s overall health and sustainability.

How is net revenue retention calculated?

NRR considers both the revenue lost due to customer churn and the revenue gained from existing customers through upsells, cross-sells, or expansions. Here’s how to calculate it.

Take the recurring revenue at the end of a period—adding any upsell, cross-sell, or expansion revenue—and subtract revenue from customers who left. Then, divide the result by the recurring revenue at the start of the period. Finally, multiply the outcome by 100 to find the percentage. Here’s the formula:

NRR = ((Recurring Revenue at End of Period + Upsell and Expansion Revenue During the Period - Revenue Churn During the Period) ÷ Recurring Revenue at Start of Period) × 100

Net revenue calculation example

For instance, a company might begin the month with $100,000 in recurring revenue. And by the end of the month, the recurring revenue is $97,000. The company gained $2,000 in upsell revenue from existing customers and lost $3,000 from customer churn.

NRR = (($97,000 + $2,000 - $3,000) ÷ $100,000) × 100 = 96

This means the company retained 96% of its net revenue, accounting for revenue losses and gains among existing customers.

What is gross revenue retention?

Gross revenue retention is a metric that quantifies the percentage of recurring revenue retained from existing customers over a specific time period, excluding any upsell, cross-sell, or expansion revenue. It focuses solely on the potential revenue loss from existing customers who either downgrade or cancel their subscriptions.

How is gross revenue retention calculated?

To find GRR, take the recurring revenue at the end of a period and subtract any upsell or expansion revenue, then divide that by the recurring revenue at the start of the period. Finally, multiply the result by 100 to find the percentage. Here’s the formula:

GRR = ((Recurring Revenue at End of Period - Upsell and Expansion Revenue During the Period) ÷ Recurring Revenue at Start of Period) × 100

Gross revenue calculation example

A company might begin the month with $100,000 in recurring revenue. By the end of the month, the recurring revenue is $97,000, but there’s also $2,000 in upsell revenue during the month.

GRR = (($97,000 - $2,000) ÷ $100,000) x 100 = 95

In this example, the company will retain 95% of its recurring revenue from existing customers. This excludes the impact of upsells or expansions.

Net revenue retention vs gross revenue retention

Both NRR and GRR are key metrics for businesses, especially those with subscription-based models. Neither metric is better than the other for business planning and strategy. They both offer important insight into the health and sustainability of revenue streams from existing customers. For example, while GRR might reveal more about core stability, NRR can better showcase compounding growth of a customer base.

Here’s a rundown of their technical differences, similarities, impact, and implications.

How NRR and GRR differ in what they measure

• NRR: This metric considers both the negative impacts (revenue loss) and positive impacts (upsell, cross-sell, or expansion revenue) on recurring revenue during a given period.

• GRR: This metric focuses solely on the negative impacts, specifically the revenue lost due to downgrades or customer churn. It doesn’t factor in any upsell or expansion revenue.

What NRR and GRR have in common

• Focus on existing customers: Both metrics revolve primarily around a company’s existing customer base rather than new customer acquisition.

• Recurring revenue: Both metrics use recurring revenue as the foundational component in their calculations, reflecting the sustainability of current business operations.

How NRR and GRR affect business health and growth

Business health and stability:

• NRR: A high NRR indicates that a company is retaining customers and successfully upselling or expanding its services among existing clients. An NRR over 100% suggests that growth from upsells and expansions exceeds lost revenue, signalling a strong position.

• GRR: A high GRR signifies that a company is retaining its existing revenue streams effectively. A declining GRR can be an early warning sign of potential issues in customer satisfaction, service quality, or market positioning.

Growth potential:

• NRR: NRR provides a more comprehensive view of growth potential. A high NRR signals that the business can grow its revenue without overly relying on new customer acquisition.

• GRR: By excluding upsells and expansions, GRR reflects a company’s ability to maintain its existing revenue base.

Implications for business strategy:

• NRR: If this is low, it suggests that the business might need to re-evaluate upselling and cross-selling strategies. Conversely, a high NRR indicates effective customer account growth and expansion strategies.

• GRR: A declining GRR can prompt businesses to reassess their core offerings, customer support, or overall customer experience.

How to interpret NRR and GRR together to assess customer value and revenue stability

Overall, GRR reflects a company’s ability to keep its core revenue intact. Think of it like a measure of a business’s defences—how well can the business hold on to the revenue it already has? A high GRR indicates minimal revenue loss due to factors such as customer churn and downgrades. It’s a foundational metric that shows the stability of a company’s existing relationships, offering a base level of customer satisfaction.

Meanwhile, NRR takes a more expansive view. While it considers the losses factored into GRR, it also accounts for the gains. This metric reflects both the company’s defensive stance in preserving revenue and its offensive strategy to grow revenue within its current customer base through upsells and expansions. A high NRR suggests that a company is both maintaining its customer base and expanding its value.

When these two metrics are taken together, they provide businesses with a comprehensive picture of customer health. While GRR signals the strength of the foundation, NRR provides insight into growth potential without the need for new customer acquisition. They show how existing customers perceive the value of the company’s offerings. If customers find value, they stay with the service and often spend more.

What are good benchmarks for net revenue retention and gross revenue retention?

In 2025, the median NRR across all software-as-a-service (SaaS) companies was 102% and the median GRR was 91%. Here’s what’s considered “good” for gross retention rate vs. net retention rate for investors and businesses.

NRR benchmarks

• Below 100%: This indicates that churn and downgrades are outpacing any additional revenue from upsells or expansions. It’s a warning sign that within the existing customer base, more revenue is disappearing than is being created.

• 100%: This means that lost revenue is offset by gains from expansions, upsells, or cross-sells. Essentially, your customer base’s revenue potential is stable.

• Above 100%: This is ideal for many subscription-based businesses. It suggests that the business is growing its revenue from the existing customer base, which means that upsells and expansions surpass any revenue losses.

• Typical good benchmark: Many successful SaaS companies aim for an NRR rate of 110% or higher.

GRR benchmarks

• 70%–85%: Businesses might find a GRR in this range concerning, especially if it’s trending downward. It suggests that a significant portion of recurring revenue is being lost.

• 85%–95%: This is a decent range for many SaaS companies, although the closer GRR is to the higher end, the better.

• 95% and above: This is an excellent range and indicates that the business is maintaining its existing revenue streams effectively, with minimal churn or downgrades.

• Typical good benchmark: For most SaaS businesses, a GRR rate of 90% or higher is considered healthy.

These benchmarks can vary based on the industry, market dynamics, the nature of the product, and other factors. However, achieving high retention rates consistently—both net and gross—usually signals that a company is in a solid position regarding customer satisfaction and product-market fit.

What’s the difference between net revenue retention and net dollar retention?

Net revenue retention and net dollar retention (NDR), as well as dollar-based net retention rate (DBNRR), are generally used interchangeably in discussions of core business metrics. All of these terms describe the percentage of recurring revenue retained from an existing customer base over a specific time period.

While revenue retention is preferred in global financial reporting, some US-based private equity firms use “dollar retention” instead. No matter the nomenclature, the metric’s purpose is to demonstrate that a company’s existing customer base can grow in value even without the acquisition of new customers.

How to improve net revenue retention and gross revenue retention

For businesses, especially those with subscription models, retention metrics offer visibility into the health of customer relationships. NRR and GRR are important for gauging how well a company is maintaining and expanding its revenue streams.

Here are some specific strategies for how a startup founder should track retention metrics:

• Build proactive support teams that quickly resolve issues: Train your support teams to identify customer needs based on a customer’s activity and subscription tier. Empower them to offer immediate, personalised solutions to increase product reliance and prevent technical friction from turning into a cancellation.

• Use product usage analytics to identify expansion opportunities and increase engagement: Track how customers interact with your product to discover which features drive the most value. Use this insight to guide feature development and create targeted communications that educate users on the full potential of your software to increase engagement.

• Detect at-risk customers early and intervene before they cancel: Use behaviour-based data to spot patterns that signal a customer is likely to cancel. Intervene early with personalised incentives, educational content, or direct assistance to address their specific usage scenarios and win back their loyalty before they leave.

• Assign dedicated account managers to protect and grow high-value accounts: Provide personalised attention to your most valuable clients through regular check-ins. Account managers should ensure the product delivers specific business outcomes and guide users through new optimisations. This can make it harder for them to justify moving to a competitor.

• Offer flexible subscription tiers and downgrade paths to retain price-sensitive customers: Create a range of subscription options to cater to the diverse needs of your customer base. Consider implementing a downgrade option for customers who might not need your full suite of services but could still benefit from a smaller subscription, to prevent them from leaving entirely.

• Launch referral programmes and customer communities to create loyalty and new revenue: Encourage existing subscribers to bring in new business by implementing a referral programme with tangible benefits. Building a sense of community among customers can create a network effect and improve the experience for your existing customers.

• Continually improve your product based on customer feedback and market trends: Invest in ongoing development to ensure your product remains competitive and relevant. Maintain a transparent, ambitious road map so customers stay for upcoming features rather than look for alternatives.

• Design transparent, flexible contracts that build long-term trust: Write clear terms and conditions that eliminate confusion and build confidence. Offering flexible options minimises the friction of long-term commitments and improves customer retention.

• Set and track customer success benchmarks tied directly to NRR and GRR: Set clear, data-driven goals for customer retention and success based on historical data and industry standards. Track these metrics closely to understand the health of your customer base and make them a central part of performance reviews and meetings.

• Implement a structured feedback loop to give customers a voice: Create easy, consistent channels for gathering in-product feedback and surveys. Act on this insight promptly and visibly so customers see that their input directly shapes the product’s direction, fostering a deeper sense of partnership.

How Stripe Sigma can help

Stripe Sigma provides a powerful SQL explorer that helps businesses analyse their Stripe data. Teams can gain faster access to deep financial insight and custom business intelligence directly within the Stripe Dashboard.

Stripe Sigma can help you:

• Build custom business intelligence with SQL: Query your Stripe data directly to generate precise, custom reports on everything from revenue by product line to regional tax liability and customer lifetime value.

• Eliminate the need for complex data engineering: Gain immediate access to your financial data without building or maintaining costly extract, transform, and load (ETL) pipelines, saving your engineering team weeks of development and maintenance work.

• Unlock granular insight into revenue and retention: Analyse complex metrics like NRR, NDR, and cohort performance to identify growth opportunities and pinpoint where to address churn risks across your customer base.

• Streamline reporting and team-wide collaboration: Save and share your most important queries with your team or schedule automated reports to ensure every stakeholder is aligned on the business's key performance indicators.

• Scale on a secure, enterprise-grade infrastructure: Rely on Stripe's highly available and PCI-compliant environment to query your most sensitive financial information without compromising performance or security.

Learn more about how Stripe Sigma can help you unlock your business data, or get started today.

How Stripe Data Pipeline can help

Stripe Data Pipeline allows you to do the same analysis in your data warehouse by combining your Stripe data with other business data. Stripe Data Pipeline and Stripe Sigma are both powered by the same underlying Stripe data, but Data Pipeline makes it easy to view that data in combination with other datasets.

Stripe Data Pipeline can help you:

• Sync directly to your warehouse
  

Data moves to Amazon Redshift, Snowflake, or Amazon S3 without routing through a third-party connector, which keeps sensitive financial data out of additional vendor infrastructure.

• Establish a single source of truth
  

Centralise your Stripe data in one place to speed up your financial close, identify top payment methods, enhance AI models and more.

• Get set up with no code
  

The connection is configured in the Stripe Dashboard, with no code required. Set up Stripe Data Pipeline in minutes and automatically receive your Stripe data and reports in your data storage destination on an ongoing basis.

Learn more about how Stripe Data Pipeline can help you unlock your business data.