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Very similar to gross retention, however, net retention factors in how losses in revenue from churn and downgrades are offset by upsells and expansion.
The formula for calculating NRR is almost the same as that for gross revenue retention, except it includes the effects of upsells and cross-sells as well. We’ll call these “upgrades” for short for the sake of simplifying the formula. When this new variable is added in, the formula for GRR becomes NRR:
NRR = [(MRR from renewals + MRR from upgrades – MRR lost due to churn – MRR lost due to downgrades) / MRR at the beginning of the month] * 100