Learn more about common financial (and startup) terms here. To learn more about Pilot, fill out the form below.
Your gross retention, or gross dollar retention, measures the percentage of your revenue that you’re able to maintain from existing customers. It’s an especially important metric for software as a service (SaaS) companies, which rely on recurring revenue.
To determine your monthly gross retention take your monthly recurring revenue (MRR) at the start of the month and subtract the churn and downgrades from the month. Then, divide the result by the MRR. Multiply by 100 if you want the percentage. You can also use your annual recurring revenue (ARR) to find your annual gross retention.
Your gross retention ratio can depend on the product or cohort you’re tracking. However, a low ratio (an annual rate under 80%) could be an indication that you need to focus more resources on retaining customers. There may be an issue with your product-market fit, customer service, or pricing.
You may also want to track your net dollar retention, which includes expansion revenue from add-ons, upselling, and cross-selling.
Pilot provides bookkeeping, CFO, and tax services for literally thousands of startups and growing businesses. We've successfully processed over 10 million transactions for our customers and have unparalleled expertise when it comes to helping businesses succeed.
We're the largest startup-focused accounting firm in the United States, and we'd love to help you. To talk to an expert on our team and find out what Pilot can do for you, please click "Talk to an Expert" below, or email us at info@pilot.com.
Get the peace of mind that comes from partnering with our experienced finance team.