How To Calculate Gross Revenue Retention

This is a smaller subset of net revenue retention.

How to calculate gross revenue retention. Gross revenue is a concept in business that allows companies to determine how much revenue they have collected based on the amount of material they sell or the number of services they provide. The only difference between grr and nrr is that grr doesn t include business expansion through upgrades and cross sells. And then you may have heard of gross dollar retention or dollar retention. Gross revenue retention rate.

Though you d probably agree that the concept of customer retention is important you re probably not taking the time or effort to calculate it right. In year 1 alice s recorded a net income of 1 000 and did not pay any dividends. Using the formula above we can calculate the retention ratio for each period. Lost dollars meaning churn and downgrades.

The two components of net revenue retention are 1 revenue contraction and 2 revenue expansion. Gross revenue retention is always equal to or lower than net revenue retention and cannot be greater than 100. Gross revenue retention grr includes the recurring revenue from your existing customers including downgrades and cancellations. How to calculate gross revenue retention rate ƒ sum rr recurring revenue at the beginning of the period downgraded rr during the period cancelled rr during the period rr at the beginning of the period what is a good gross revenue retention rate benchmark.

The maximum possible value for gross revenue retention rate is 100. In year 2 alice posted a net income of 5 000 and paid out 500 in dividends. Customer retention is the essential but often overlooked foundation for growth in subscription based services. The basic calculation is the same as net revenue retention however the mrr for each individual customer in the current month cannot exceed the mrr for that customer from one year ago.

Net revenue retention vs gross revenue retention. Again net revenue retention focuses just on your existing customer base. Net revenue retention nrr rate is the percentage of recurring revenue retained from existing customers in a defined time period including expansion revenue downgrades and cancels. In year 3 alice reported a net income of 15 000 and paid out a total of 1 000 in dividends.

Most entrepreneurs think that growing equals gaining but in saas there s a much more important factor than acquisition. Gross dollar retention is lost dollars from your existing customer base. Gross revenue retention grr measures annual revenue lost from a company s customer base not including any benefits from expansion revenue cross sells upsells or price increases. It differs from other forms of revenue information in that gross revenue does not account for any costs associated with.