Gross Revenue Retention (GRR) is a metric used in the SaaS (Software as a Service) industry to measure the amount of revenue retained from existing customers over a specific period of time, relative to the revenue from those same customers in a prior period.
It indicates the ability of a SaaS company to retain its existing customer base and increase their spending over time. GRR does not take into account revenue from new customers or any changes in pricing. A high GRR is desirable as it shows that customers are staying with the company and increasing their spending, leading to sustainable growth.
The formula for Gross Revenue Retention (GRR) is:
GRR = (Revenue from existing customers in current period / Revenue from existing customers in previous period) * 100
where:
“Revenue from existing customers in current period” is the total revenue generated from the same set of customers in the current period being analyzed.
“Revenue from existing customers in previous period” is the total revenue generated from the same set of customers in a previous, comparable period.
For example, if a SaaS company had $100,000 in revenue from its existing customers in January of 2022 and $120,000 in revenue from those same customers in January of 2023, its GRR would be calculated as:
GRR = ($120,000 / $100,000) * 100 = 120%
This indicates a 20% increase in revenue from the same set of customers, demonstrating strong retention and growth.
