How churn rate is calculated
- Customer churn
customers lost ÷ customers at start of month- Revenue churn
MRR lost (cancels + downgrades) ÷ starting MRR- Net revenue retention
(starting MRR − MRR lost + expansion) ÷ starting MRR- Customer lifetime
1 ÷ monthly customer churn
Customer churn vs revenue churn
Customer churn counts people. Revenue churn counts money. They differ when big and small customers leave at different rates. If your largest accounts stay and small ones leave, revenue churn will be lower than customer churn, which is usually the healthier shape.
What is a good churn rate for SaaS?
It depends on who you sell to. Commonly cited ranges are roughly 3 to 7% a month for products sold to small businesses and consumers, and under 1% a month for mid-market and enterprise contracts. Small monthly numbers compound: 5% a month means you lose about 46% of customers in a year.
What does net revenue retention above 100% mean?
It means upgrades from customers you already have bring in more than you lose to cancellations and downgrades. Revenue grows even if you add no new customers. It is one of the strongest signals a SaaS business can show.
How do I reduce churn?
- Ask everyone who cancels why, and group the answers. Fix the biggest group first.
- Find the step in onboarding where customers who leave stop using the product.
- Offer annual plans. Customers who commit for a year churn less.
- Retry failed card payments automatically. A lot of churn is accidental.