It's vital to know what percentage of your monthly revenue you're retaining. This will help ensure that the company is making a profit and not losing money. There are two types of Revenue Retention: Gross Revenue Retention and Net Revenue Retention.
Gross Revenue Retention percentage is a measure of how well you ensure that your customers will continue their relationship with you. This doesn’t include upgrades and other revenue streams.
The formula is: Gross Revenue Retention = (Churned MRR + Downgrade MRR / MRR at the end of the previous month)
Net Revenue Retention includes money from upgrades or new subscriptions by existing customers, so it's important to keep an eye on this number if want your company’s profits maximizing potential!
The formula is: Net Revenue Retention = (Churned MRR + Downgrade MRR – Expansion MRR) / MRR at end of last month)