Finance

Churn Rate

The percentage of customers who cancel in a given period.

Churn Rate measures the percentage of customers (or revenue) lost in a given period. Customer churn counts individual customers; revenue churn counts dollar value (which can differ if your customer base has uneven contract sizes). Net Revenue Retention accounts for expansion revenue offsetting churn.

Benchmarks vary dramatically. SMB SaaS commonly runs 3-7% monthly churn. Mid-market SaaS targets 1-2% monthly. Enterprise SaaS targets <1% monthly. Consumer subscriptions can run 10%+ monthly. Lower churn equals dramatically higher LTV and easier scaling.

Formula

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

Example

Start the month with 500 customers, lose 20 during the month. Monthly churn = 20 / 500 = 4%.

Frequently asked questions

Is gross or net churn more important?

Both matter. Gross churn reflects customer loss; net churn (after expansion revenue) reflects business momentum. Negative net churn (expansion > churn) is the gold standard.