Use DRR to Measure the Health of Your SaaS Business
Ensure you have a fighting chance at survival and growth
What is DRR
You’ve no doubt heard of ARR (Annual Recurring Revenue) and MRR (Monthly Recurring Revenue). DRR isn’t the daily version of those metrics — it stands for Dollar Revenue Retention. It’s not a raw dollar figure of how much revenue you’re bringing in, but rather a percentage that indicates whether your core business is growing or shrinking, before considering new deals.
As such, DRR is a great way to understand how healthy your business is.
A low DRR essentially means that your customers are leaving you faster than you can replace them — obviously a bad sign for the health of your business. On the other hand, a high DRR can mean that not only are your customers not bailing in droves, but they are actually upgrading so fast that they are outpacing the churn you have — a great sign that you’ve built a healthy business and product that people want!
Calculating DRR
To calculate your DRR, you take the rate of revenue you pulled in at the beginning of a time period, and compare that to the rate of revenue you pulled in at the end of the time period specifically for those customers that were with you at the beginning…