What is the Difference Between GRR and NRR?

What is GRR?

GRR is short for Gross Recurring Revenue. The purpose of GRR is to measure the percentage of revenue that a company retains over a specified period of time.

GRR is only based revenue retained from existing customers, and does not include any cross sells or upsells.

The way to calculate GRR is by dividing the ending revenue by the starting revenue and multiplying that amount by 100.

GRR = (ending revenue / starting revenue) * 100

Ex: A company starts the fiscal year with $1,000,000 and ends the year with $750,000 then the GRR would be 75%.

(1000000 / 750000) * 100 = 75% GRR

The greater the GRR, the more successful a company has been in retaining recurring revenue from it's existing clients.

The difference from 75% to 100% (25%) represents your churn rate. 

Churn can come from both customer churn (cancellation) and revenue churn (downgrades).

What is NRR?

NRR is short for Net Recurring Revenue (also known as Net Dollar Retention NDR). The purpose is to measure the percentage of total recurring revenue from existing customers in a company. This includes all upsells, cross-sells, and expansions. 

NRR offers a more comprehensive look into how successful a company is in maintaining and growing their customer relationships and revenue.

Calculating NRR is done by looking at the total revenue generated by all customers at the start of a period and comparing it to the total revenue generated by the same customers at the end of the period. Additionally, you must know the upsell and expansion revenue generated.

NRR = ((Ending Revenue - Expansion Revenue) / Starting Revenue) * 100

Ex: A company starts the fiscal year with $1,000,000 and ends the year with $1,500,000 and $600,000 of that was generated from expansions and upsells then the NRR would be 90%.

NRR = ((1,500,000 − 600,000) / 1,000,000​) × 100 = 90%