Request a callChurn rate, gross revenue retention and net revenue retention: how to calculate them
Logo churn is customers lost divided by customers at the start of the period. Gross revenue retention (GRR) is starting recurring revenue minus churn and contraction, divided by starting revenue. Net revenue retention (NRR) adds expansion to that numerator. GRR cannot exceed 100%, while NRR can, when expansion outweighs losses.
Key takeaways
- Logo churn counts customers. Revenue retention counts money.
- GRR shows how much you keep. NRR shows how much you keep and grow.
- Always define the period and the cohort before comparing numbers.
- Read GRR and NRR together to see where growth really comes from.
The formulas
- Logo churn = customers lost in the period divided by customers at the start.
- Gross revenue retention = (starting recurring revenue minus churned revenue minus contraction) divided by starting recurring revenue.
- Net revenue retention = (starting recurring revenue minus churn minus contraction plus expansion) divided by starting recurring revenue.
A worked example (illustrative numbers)
Imagine a company starts the year with 100 customers and $10,000,000 in annual recurring revenue. During the year, 8 customers leave, taking $500,000 with them. Remaining customers reduce spend by $200,000 and expand by $800,000. These figures are examples for teaching, not benchmarks.
| Measure | Calculation | Result |
|---|---|---|
| Logo churn | 8 divided by 100 | 8% |
| Gross revenue retention | (10,000,000 minus 500,000 minus 200,000) divided by 10,000,000 | 93% |
| Net revenue retention | (10,000,000 minus 500,000 minus 200,000 plus 800,000) divided by 10,000,000 | 101% |
How to read the results
Here the company loses 7% of its revenue base to churn and contraction but regains more through expansion, so NRR passes 100%. A company with high NRR can grow even with no new customers, but a low GRR means it relies on expansion to cover leaks. Fixing the leaks is usually cheaper than finding more growth elsewhere.
Common mistakes
- Mixing monthly and annual figures.
- Counting new customers in the starting cohort.
- Ignoring contraction and focusing only on cancellations.
- Comparing against benchmarks without matching segment and contract size.
Frequently asked questions
What is the difference between GRR and NRR?
GRR counts only losses (churn and contraction), so it cannot exceed 100%. NRR also counts expansion, so it can.
Which period should I use?
Annual cohorts are common for B2B with annual contracts. Use monthly for monthly plans, and stay consistent.
What is a good retention rate?
It depends on segment, contract size and market. Compare against your own history and similar companies rather than a single number.
Related service: RevOps and marketing operations. See also pricing and client results.