Gross dollar retention serves as your revenue reality check. It measures exactly how much recurring revenue you keep from existing customers before you factor in any expansion. Think of it as your revenue foundation. If you lose customers faster than you acquire them, upselling acts as a temporary patch rather than a solution.
You track this metric to measure product stickiness and forecast renewals with accuracy. It acts as an early warning system for revenue quality. A dip in gross dollar retention signals that churn or downgrades are eroding your base. Spotting these trends early helps you protect your bottom line.
This guide covers how to calculate gross dollar retention, what targets to aim for, and how to spot common calculation errors.
Defining gross dollar retention (GDR)
Gross dollar retention measures the recurring revenue you retain from your existing customer base over a specific period. It excludes expansion revenue from upsells or cross-sells. You see exactly what stays rather than what grows.
The "gross" label means you strip out upgrades and new purchases to focus solely on downgrades and churn. This provides a clear view of retention health before growth metrics isolate or distract from core revenue trends.
Scrappy finance teams and model owners rely on GDR to validate product-market fit and customer satisfaction. By definition, GDR can't rise above 100%. If you report 95% GDR, you kept 95% of your starting revenue. The difference left your base.
Use GDR to separate retention from expansion. Strong upsells often mask churn problems. GDR removes that noise and brings the real story to the surface.
Breaking down GDR formulas
The formula for gross dollar retention is simple:
GDR = (starting ARR - contraction revenue - churn revenue) / starting ARR × 100
Start with your ARR at the beginning of the period. Subtract revenue lost from downgrades (contraction) and from customers who leave completely (churn). Divide by your starting ARR, then multiply by 100 for your percentage.
You can tweak how you calculate GDR to match what you want to measure.
Monthly GDR using MRR
If you want faster feedback, calculate GDR monthly using MRR instead of ARR. The formula is the same, just substitute in monthly recurring revenue:
Monthly GDR = (starting MRR – contraction MRR – churn MRR) / starting MRR × 100
This lets you spot retention shifts quickly without waiting for quarterly or annual cycles. You respond faster to what matters.
Cohort-based GDR
Cohort GDR groups customers by when they signed up, like a Q1 2025 cohort. You start with all customers who had ARR at the start of your chosen window. Then sum ARR from just those customers at the end, excluding any expansion during the window. This way, you see how different groups perform and whether new signups stick around longer or shorter than past cohorts.
Logo-weighted GDR
Logo-weighted GDR adds in customer count. You measure how many customers you keep, not just the revenue. This is useful if a few big accounts make up most of your ARR. Strong dollar retention can hide if you're losing lots of small customers. Logo-weighted GDR points out if customer loss is a bigger problem than it first looks.
Segment-specific GDR
Break down GDR for each customer segment: enterprise, mid-market, SMB. Enterprise customers usually stick longer. SMB churn can be higher. Segment-specific GDR spotlights which groups keep your revenue stable and which need more support. You can then allocate resources to move the numbers where it matters most.
Choosing the right components
Get your GDR inputs right and your metric is rock-solid. Even small decisions about what to include or exclude can change your numbers a lot.
Defining the measurement period
Calculate GDR monthly, quarterly, or annually. Monthly is the most detailed but can bounce around. Quarterly smooths out noise. Annual shows the big picture but delays your insights.
Pick your cadence and stick to it. Changing the period makes trend lines hard to trust.
Voluntary vs. involuntary churn
Voluntary churn is when customers choose to cancel. Involuntary churn comes from payment failures, expired cards, or billing issues. Always track both. Lumping them together blurs what actually happened. Involuntary churn is often recoverable. Voluntary churn points to product or value concerns.
Contract pauses and temporary downgrades
Some customers pause contracts or downgrade temporarily. These should be handled carefully. A seasonal pause isn't a permanent loss. If a customer comes back, don't count that as churn. If they downgrade, count it as contraction, but track the story behind the change.
Multi-product customers
Multi-product customers might cancel one product but keep another. You can treat that as contraction or partial churn; just be consistent in your approach.
Document how you handle partial churn so your team stays on the same page.
Contract timing and revenue recognition
Multi-year contracts need careful handling. Even if a customer signs for three years, recognize revenue monthly. Use recognized revenue for GDR, not bookings or cash. Follow revenue recognition principles so your numbers reflect the business as it really is.
Usage-based pricing challenges
For usage-based models, consumption swings up and down. That's not always churn, just normal fluctuation. To smooth it out, measure GDR over longer periods like a quarter or year. Or create a normalized GDR that adjusts for usage patterns you expect.
Why GDR matters in financial planning
Gross dollar retention gives you a real-time health check on your revenue base. It tells you if your core customers will stick with you quarter after quarter.
When you make forecasts, GDR sets the floor. You know clearly how much ARR you'll keep before new sales or expansion. That boosts your accuracy and helps you plan with confidence.
GDR also guides where to invest your energy and dollars. If retention slips, put effort into customer success or product improvements. If retention is strong, shift focus to growth and expansion.
For team planning, use GDR to size your customer success team. Lower GDR? Add resources to ensure customers succeed. Higher GDR? Shift your efforts to new opportunities.
Investors look closely at GDR. If you post 95% or higher, your revenue base is predictable. Predictability strengthens your valuation and helps in fundraising.
GDR's relationship to other revenue metrics
GDR connects to a wider set of revenue metrics. Together, they tell the whole story.
Net dollar retention (NDR)
NDR includes expansion revenue like upsells and cross-sells alongside what GDR tracks. A company with 95% GDR and 120% NDR has healthy retention and growth.
If NDR is only high because of aggressive upsells, but your GDR sits low, you'll want to address that gap. GDR is the floor. NDR delivers the high end.
Logo retention rate
Logo retention counts customers, not dollars. You could have 90% GDR but 80% logo retention if smaller customers leave while big ones stay. Both matter. GDR shows revenue strength. Logo retention shows if your customer pool is healthy.
Churn rate
Churn rate is the flip side. If your GDR is 92%, your dollar churn rate is 8%. Churn tells you what you lost. GDR shows what you kept.
Customer lifetime value (LTV)
Higher GDR leads directly to higher LTV. If you keep 95% of revenue year-over-year, customers stick around longer and spend more in total.
ARR growth
ARR growth pulls in new sales, expansion, and retention. GDR isolates retention. You can still grow ARR with low GDR, but it's much harder, and costlier, than growing by holding onto existing customers.
Revenue predictability
When your GDR is strong, revenue is easy to forecast. Your business plans are grounded in reality. If GDR drops, unpredictability creeps in and planning gets harder.
SaaS valuation multiples
Investors use GDR to size up business quality. Companies with GDR under 90% often lag behind peers. Higher GDR strengthens valuation because the underlying revenue is solid and dependable.
Benchmarks and guidelines
Gross dollar retention benchmarks differ by customer segment, contract type, and product. There's no universal "best" number, but some signals show where you stand.
If your GDR is above 90%, you're doing well. If it dips under 85%, take action.
Across SaaS companies, median gross retention is 91%. Best performers hit 95% or higher. Less than 80% means you want to rethink your approach fast.
Benchmarks by customer segment
Enterprise-focused companies almost always post higher GDR than those working with SMBs. Enterprise customers with ACVs over $50K see GDR at 92% or higher, top brands can hit 99%. Mid-market clients with ACVs from $5K to $50K land around 90-95%. For SMBs (under $5K ACV), 85-90% is the norm.
It comes down to switching costs and contract terms. Enterprise clients need more integration and stay because switching is tough.
Contract length and pricing model
Annual contracts usually deliver higher GDR than month-to-month options. More commitment means fewer chances to leave during the contract term.
Usage-based pricing creates more fluctuation in GDR than subscriptions. Consumption moves up and down, showing in your GDR even when customer relationships don’t really change.
Company maturity
GDR improves over time as you dial in product-market fit and find your ideal customer. Early on, GDR might lag as you learn. The more you focus on customers who succeed, the better your retention becomes.
Common pitfalls of gross dollar retention
Getting GDR right is simple if you know where mistakes hide. Watch for these easy-to-miss pitfalls:
Confusing GDR with NDR
Don't mix up gross dollar retention and net dollar retention. GDR leaves out expansion. NDR includes it. If you add upsells to GDR, you'll overstate your retention and miss important churn drivers.
Ignoring logo retention
Dollar retention can look great if big customers stay, but you might miss that many customers have left. Strong GDR plus weak logo retention means it's time to look closer at product fit.
Not adjusting for contract timing
Contract renewals often bunch together. Your GDR may look different each quarter. Use rolling periods or cohort analysis to avoid timing traps and see the real trends.
Treating all churn equally
Some churn is actually fine, like poor-fit customers moving on. Losing ideal customers is a different story. Track churn by segment so you know exactly who’s leaving.
Mishandling plan migrations
When you restructure or move customers to new plans, it can look like a downgrade. Adjust for these changes so your retention readout stays accurate.
Overlooking seasonality
Some businesses have seasons, retail dips in the off-season, education churns at school year end. Build in these cycles so you don’t confuse normal swings with bigger retention issues.
Comparing across business models
Don't benchmark your GDR against companies with different contract lengths, pricing, or customer types. An enterprise company with annual contracts isn’t useful as a benchmark for a consumer app with monthly billing.
Ignoring the denominator problem
Growing fast can hide weak GDR. Always measure GDR on your current customer group, not the total base, so fast growth doesn’t cover up cohort losses.
Not distinguishing recoverable churn
Some churn is short-term, payment lapses or billing hiccups. Some is permanent. Track recoverable churn separately so you know what you can win back versus what really needs attention.
How to calculate gross dollar retention in Runway
Runway makes tracking gross dollar retention easy with your real subscription data. Here’s a simple workflow.
Step 1: Connect your subscription data
Import your subscription MRR into Runway. Connect sources like Stripe or HubSpot. Pull in data so you have one row for each subscription and MRR as a time series. Add a customer identifier so you can segment later by type, region, or plan.
Step 2: Classify MRR movements
- Add four columns: new MRR, upgrade MRR, downgrade MRR, and churn MRR.
- Use
iflogic to compare this month’s MRR with last month’s.
For downgrades:
if(MRR > 0 and MRR.last_month > 0 and MRR < MRR.last_month, MRR.last_month - MRR, 0)
For churn:
if(MRR = 0 and MRR.last_month > 0, MRR.last_month, 0)
This approach tags every subscription with its monthly movements automatically.
Step 3: Define your starting base
Create a driver called Prior existing MRR to grab your starting book for the retention cohort. Include only customers with active revenue last month:
if(MRR.last_month > 0, MRR.last_month, 0)
This is your denominator for GDR.
Step 4: Aggregate components at the model level
- Sum Prior existing MRR for starting MRR
- Sum Downgrade MRR
- Sum Churn MRR
Step 5: Calculate GDR %
Create a number driver named GDR % and use this formula:
(Starting_MRR - Downgrade_MRR - Churn_MRR) / Starting_MRR
Set it as a percentage to see your monthly gross dollar retention at a glance.
Step 6: Set up actuals and forecast
Pick your last close date in Runway so the platform switches from actuals to forecast. You get a single view of historical and projected GDR, no more separate spreadsheets.
You can forecast future downgrades and churn with past data or with new assumptions, your call.
Step 7: Segment and visualize
Use your dimensions to filter GDR by customer type, region, or plan. This shows which segments perform best.
Add your GDR % driver to tables and charts. Compare months, see rolling 12-month averages, and track retention by cohort using Runway's cohort modeling tools.
Step 8: Track and iterate
Each month, Runway refreshes your GDR for you. You can drill into changes for full transparency.
This makes it easy to audit your numbers and explain retention trends at any meeting.
Build long-term stability with GDR
Gross dollar retention keeps your revenue engine running smoothly. It shows whether your team is keeping customers happy or missing out. New sales and upsells won't replace a strong GDR foundation.
Track GDR consistently. Segment by customer type. Stay close to what drives downgrades and churn. Use your retention numbers to guide investments and improve your product.
Great retention unlocks compounding growth. Start with your GDR and build from there.
Want to track and model your retention metrics with clarity? Get started with Runway and give yourself a financial model that grows with you.