What Is Churn Rate?

The percentage of customers or revenue lost over a given period.

The percentage of customers or revenue lost over a given period.

Churn rate measures the percentage of customers who cancel their subscriptions during a given time period. It's one of the most critical SaaS metrics because even small improvements in churn can dramatically increase lifetime value.

There are two main types: customer churn (logo churn) measures the percentage of customers lost, while revenue churn measures the percentage of MRR lost. Revenue churn is generally more important because it accounts for the value of each customer.

Good SaaS churn rates vary by segment: enterprise SaaS typically sees 5-7% annual churn, mid-market 10-15%, and SMB 3-7% monthly churn. Negative net revenue churn (where expansion exceeds losses) is the gold standard.

Formula

Monthly Churn Rate = (Customers Lost ÷ Customers at Start of Month) × 100

Example

If you start the month with 500 customers and lose 10, your monthly churn rate is 2%.

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