NRR and GRR are both revenue retention metrics, but they answer different questions. Understanding which to prioritize depends on your stage and business model.
The key difference
GRR (Gross Revenue Retention) = % of starting MRR retained, after contraction and churn, before expansion. Always ≤ 100%.
NRR (Net Revenue Retention) = % of starting MRR retained and grown, including expansion minus contraction and churn. Can exceed 100%.
| Metric | Formula | Range | What it measures |
|---|---|---|---|
| GRR | (Start − Contraction − Churn) ÷ Start | 0–100% | Pure retention quality |
| NRR | (Start + Expansion − Contraction − Churn) ÷ Start | 0–∞ | Retention + expansion |
When GRR matters more
Early stage: If your expansion motion is immature, GRR is more actionable. High NRR driven by heavy expansion can mask a GRR problem — if expansion slows, NRR collapses.
Investor diligence: Investors want to see GRR to understand pure retention quality, separate from expansion. A company with 85% GRR and 105% NRR has fragile unit economics — expansion is papering over a retention problem.
Benchmarking churn improvement: GRR directly reflects churn changes. If you reduce churn by 2 points, GRR improves by 2 points. NRR improvement might be masked or amplified by expansion changes.
When NRR matters more
Growth reporting: NRR is the headline metric for investor updates because it captures the full picture of revenue trajectory from existing customers.
Product-led growth: PLG businesses often have lower GRR (self-serve products have higher churn) but high NRR (power users expand significantly). NRR better captures the economics.
Compensation design: Tying customer success compensation to NRR incentivizes both retention and expansion — aligning CS with revenue outcomes.
Target ranges
| Metric | Acceptable | Good | Excellent |
|---|---|---|---|
| GRR | > 80% | > 85% | > 90% |
| NRR | > 95% | > 105% | > 115% |
Calculate both with the free NRR Calculator.