How to use the net revenue retention calculator
- Choose the period. Pick one month if you track movements in monthly recurring revenue (MRR), or twelve months if you measure a cohort over a year in annual recurring revenue (ARR). The calculator converts either one into the other.
- Enter the cohort’s starting revenue. This is the recurring revenue of the customers who were paying on day one of the period. Billing and subscription analytics tools report it as opening MRR.
- Enter the three movements from those same customers: expansion (upgrades, seats, add-ons, price rises), contraction (downgrades and discounts) and churned revenue (customers who left).
Results show NRR and GRR for the period, the annualized or monthly equivalent, the gross revenue churn rate and the cohort’s ARR three years out if retention stays where it is.
How NRR and GRR are calculated
GRR = (Start − Contraction − Churn) ÷ Start, capped at 100%All amounts are recurring revenue from the same cohort of customers over the same period. Revenue from new customers is excluded.
To move between periods, the calculator compounds:
Monthly rate = Annual rate1/12
Cohort ARR in year t = ARR today × Annual NRRtRates are written as ratios: 101.4% is 1.014. The projection assumes the same retention repeats every year.
A worked example
A software company starts the month with $250,000 of MRR from existing customers. During the month they add $7,500 through upgrades, give back $1,500 in downgrades and lose $2,500 when some customers cancel.
The cohort ends the month at $253,500. NRR is 101.4% and GRR is 98.4%. Expansion was 188% of the revenue lost, so the group grew by $3,500 with no new sales.
If every month looked like this one, annual NRR would be about 118.2% and annual GRR 82.4%. The cohort’s $3,000,000 of ARR would reach $4,948,660 in three years. Without expansion, it would shrink to $1,678,591.
Why NRR above 100% means growth without new customers
When NRR is above 100%, the customers you already have pay you more each year than they did the year before, even after some leave. Every past cohort becomes a growing base, and new sales add to that base instead of refilling a leak. The effect compounds:
| Annual NRR (GRR 90% in every case) | Cohort ARR after 3 years, from $1,000,000 |
|---|---|
| 90% | $729,000 |
| 100% | $1,000,000 |
| 110% | $1,331,000 |
| 120% | $1,728,000 |
All four companies lose the same 10% of revenue each year. The difference is entirely expansion, and after three years the best cohort is worth more than twice the worst. Below 100%, a business has to win new revenue just to stand still, which raises the pressure on sales and marketing spend and on the customer acquisition cost.
Reading NRR and GRR together
The two numbers answer different questions. GRR measures how sticky the product is: whether customers stay and keep paying for what they bought. NRR adds whether they buy more.
- High GRR, NRR near 100%: customers stay but rarely grow. Pricing tiers, seats or add-ons may give them no reason to spend more.
- Lower GRR, high NRR: a few large accounts are expanding fast while many others leave. Growth depends on a small group of customers, and churn may be hiding inside a healthy headline figure.
- Both high: the strongest pattern, usually seen with products that become part of a customer’s daily workflow.
Gross retention around 90% or more a year is often cited as strong for software sold to larger businesses, with lower figures common for small-business and consumer products. Treat any benchmark as a loose reference, since contract length and customer size change what is normal.
What this calculator does not include
- Cohort measurement over a full year. Compounding one month assumes every month is alike. Annual contracts concentrate churn at renewal dates, so a true twelve-month cohort can differ from twelve times a single month.
- Revenue quality. One-time fees, services and usage spikes should stay out of recurring revenue.
- Customer counts. NRR is weighted by revenue, so losing many small customers barely moves it. Our churn rate calculator measures logo churn alongside revenue churn.