Churn Rate
Churn rate is the percentage of customers (or revenue) that cancels or doesn't renew in a given time period. It's the single most important retention metric for subscription businesses.
Formula
In depth
Types of churn: - Customer Churn: % of customers who cancelled - Revenue Churn (MRR Churn): % of MRR lost from cancellations - Net Revenue Churn: revenue churn offset by expansion revenue from remaining customers
Negative churn occurs when expansion revenue from existing customers exceeds revenue lost from churned customers — a sign of a very healthy SaaS business.
Good churn benchmarks (monthly): - B2C SaaS: 3–8% is typical - B2B SMB SaaS: 1–3% - B2B Enterprise: < 1%
The compounding effect of churn is brutal. At 5% monthly churn, you lose half your customer base every 14 months.
Real example
You start the month with 200 customers and 10 cancel: Monthly Churn = 10 ÷ 200 = 5%. Annual equivalent: 1 - (1 - 0.05)^12 = 46% — nearly half your base gone in a year.
Tools & calculators
Related terms
MRR (Monthly Recurring Revenue)
Monthly Recurring Revenue (MRR) is the predictable, normalized monthly revenue generated from all active subscriptions. It's the north star metric for SaaS companies.
CAC (Customer Acquisition Cost)
Customer Acquisition Cost (CAC) is the total cost of acquiring one new paying customer, including all marketing and sales spend.
LTV (Lifetime Value)
Customer Lifetime Value (LTV or CLV) is the total predicted revenue you'll earn from a customer over the entire duration of your relationship.
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