SaaS Metric
Churn Rate
Definition
Churn rate is the percentage of customers (logo churn) or recurring revenue (revenue churn) that you lose over a given period. Customer churn = customers lost ÷ customers at the start of the period. Revenue churn = MRR lost ÷ MRR at the start. For B2B SaaS, monthly customer churn under about 2% is generally healthy; above 4–5% signals a leaky bucket that caps growth.
Formula
Customer churn rate = (customers lost in period ÷ customers at start of period) × 100 Revenue churn rate = ((churned MRR + contraction MRR) ÷ MRR at start) × 100
Benchmark
Healthy B2B SaaS monthly customer churn is typically under ~2%; under ~5% monthly revenue churn. SMB-focused products run higher; enterprise lower.
Customer churn vs. revenue churn
Customer (logo) churn counts how many accounts you lost, regardless of size. Revenue (MRR) churn measures the recurring revenue lost. They diverge when the customers who leave are not average-sized: lose a few large accounts and revenue churn spikes even if logo churn looks fine.
Gross revenue churn counts only revenue lost to cancellations and downgrades. It ignores expansion, so it can never be negative. Net revenue churn subtracts expansion from churn — and when expansion outpaces losses, net churn goes negative, which is the goal.
Why churn rate matters
Churn is the single biggest brake on compounding growth. A business adding 5% new MRR a month while losing 5% to churn is running on a treadmill. Small reductions in churn compound: cutting monthly churn from 4% to 2% roughly doubles the average customer lifetime and therefore lifetime value.
Frequently asked questions
How do you calculate churn rate?
Customer churn rate = customers lost in a period ÷ customers at the start of that period, expressed as a percentage. Revenue churn rate uses MRR instead of customer counts: (churned MRR + contraction MRR) ÷ starting MRR.
What is a good churn rate for SaaS?
For B2B SaaS, monthly customer churn under roughly 2% is generally considered healthy, with under ~5% monthly revenue churn. SMB-focused products tolerate higher churn; enterprise products should be far lower. Annual figures compound, so 2% monthly is roughly 22% a year.
What is the difference between gross and net churn?
Gross revenue churn counts only lost and downgraded revenue and is always positive. Net revenue churn subtracts expansion revenue from churn; when existing customers expand faster than others leave, net churn is negative — a strong sign of product-market fit.
Related metrics
Net Revenue Retention (NRR)
Net revenue retention (NRR) measures recurring revenue kept from existing customers including expansion. Learn the NRR formula, what 100%+ means, and SaaS benchmarks.
Gross Revenue Retention (GRR)
Gross revenue retention (GRR) measures the recurring revenue you keep from existing customers excluding expansion. Learn the GRR formula, benchmarks, and how it differs from NRR.
Customer Lifetime Value (LTV)
Customer lifetime value (LTV) estimates the gross-margin revenue an average customer generates before churning. Learn the margin-adjusted LTV formula, the LTV:CAC ratio, and benchmarks.
Monthly Recurring Revenue (MRR)
Monthly recurring revenue (MRR) is the normalised, predictable subscription revenue earned each month. Learn the MRR formula, its movement components, and how it relates to ARR.
Track this automatically
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Benchmarks are general SaaS ranges and vary by segment, stage and business model. Last reviewed 2026-05-30.