What is the difference?
Gross MRR Churn Rate vs Net MRR Churn Rate
Gross MRR Churn Rate
Net MRR Churn Rate
What is it?
Gross Monthly Recurring Revenue Churn Rate (Gross MRR Churn Rate) is the percentage of recurring revenue lost due to both cancellation and downgrades. Note that it is common to express this metric as a monthly rate, though it can also be expressed as Gross ARR Churn Rate.
Net Monthly Recurring Revenue (MRR) Churn Rate is the percentage change in MRR due to expansions, cancellations and downgrades. A negative Net MRR Churn Rate occurs when expansions exceed downgrades and cancellations and is a strong positive indicator of company health. This metric is typically expressed as a monthly rate although it can also be an annual rate: Net Annual Recurring Revenue (ARR) Churn Rate.
Who is it for?
Categories
Formula
Example
For example, if the total MRR churned (downgraded and cancelled) this month was $2000 and the total MRR (measured at the start of the month) is $100,000, then the Gross MRR Churn Rate would be 2%. $2000 (churn for entire month) / $100,000 (MRR as of beginning of month) = 0.02 or 2%
Example A: A company’s MRR is $50,000 with expansions of $7,000 and downgrades and cancellations of $10,000. The Net MRR Churn Rate is ($10,000 - $7,000) / $50,000 = 6.0% Example B: A company’s MRR is $100,000 with expansions of $12,000 and downgrades and cancellations of $7,000. The Net MRR Churn Rate is ($12,000 - $7,000) / $100,000 = -5.0%
Published and updated dates
Date created: Oct 12, 2022
Latest update: Mar 18, 2024
Date created: Oct 12, 2022
Latest update: Oct 12, 2022