Enter last month's MRR plus new, expansion, contraction and churned MRR to get ending MRR, gross churn, net churn and net revenue retention in one pass.
Gross MRR churn only counts what you lost to cancellations and downgrades against last month's revenue base. Net MRR churn nets that against expansion revenue from existing customers upgrading, so it can go negative — meaning your existing customer base is growing revenue faster than it's shrinking from losses, even before a single new customer signs up. That's "negative churn," and it's the single best predictor of a subscription business that compounds on its own rather than needing new sales just to stand still.
Net revenue retention (NRR) is the same idea framed as a percentage of what you started with: 100% means existing customers exactly replace what they lose to churn and downgrades; above 100% is expansion outpacing losses; below 100% means you're running to stand still. Track gross and net separately, because a healthy net number can hide a gross-churn problem that expansion revenue is currently papering over — if expansion slows, the gross number is what hits you.
Gross churn only counts revenue lost to cancellations and downgrades. Net churn subtracts expansion revenue (upgrades, add-ons) from that loss, so it can go negative when expansion outpaces losses — gross churn never goes negative.
Under 3-5% gross monthly churn is generally healthy for small B2B subscription businesses; consumer subscriptions often run higher. Net revenue retention above 100% (negative net churn) is the benchmark that matters most for long-term compounding growth.
If existing customers' upgrades and add-ons (expansion MRR) generate more revenue than you lose to cancellations and downgrades, the existing customer base grows on its own even with zero new customers — that's what pushes NRR past 100%.
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