This article was originally published at , it's because each answers a fundamentally different question. If you can only track one, track NRR. It's the single number that tells you whether your business has a future.
How Do You Calculate Each Retention Metric?
Most founders have the formulas wrong. They include new customers in the numerator, or they count downgrades as full churn, or they split the difference and end up with a number that means absolutely nothing. Here are the three calculations that matter — each one built for the decisions a bootstrapped founder actually faces.
Customer Retention Rate = (Customers at End − New Customers Acquired) ÷ Customers at Start × 100
This is logo retention, pure and simple. If you started December with 200 paying customers, acquired 25 new ones, and ended with 195, your retention rate is (195 − 25) ÷ 200 = 85%. That means 30 customers churned — 15% of your base gone in a single month. Annualize that, and you've lost over 85% of your starting customers by year-end. Logo retention alone cannot tell you whether those 30 customers were your smallest accounts or your whales.
Gross MRR Retention = (Starting MRR − Churned MRR − Downgrade MRR) ÷ Starting MRR × 100
This is where the pain lives. Using the same $17,390 MRR base: if you lost $1,200 from cancellations and $350 from downgrades, gross MRR retention is ($17,390 − $1,200 − $350) ÷ $17,390 = 91.1%. That 8.9% monthly leakage means you need to add roughly $1,550 in new MRR every single month just to stay flat — before any growth happens. Baremetrics open benchmark data consistently places healthy SaaS gross MRR retention above 90%, but bootstrapped companies with strong onboarding routinely hit
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