How to calculate churn rate
Churn rate is the share of what you had at the start of a period that you lost during it. Count customers for customer churn and MRR for revenue churn:
| Metric | Formula |
|---|---|
| Customer churn rate | Customers lost ÷ customers at the start of the period |
| Gross revenue churn | (Churned MRR + contraction MRR) ÷ MRR at the start |
| Net revenue churn | (Churned MRR + contraction MRR − expansion MRR) ÷ MRR at the start |
| Gross revenue retention (GRR) | 1 − gross revenue churn |
| Net revenue retention (NRR) | 1 − net revenue churn |
| Average customer lifetime | 1 ÷ monthly customer churn |
Only count the customers you started with. New sign-ups during the period belong in neither number: adding them to the base makes a growing company look like it churns less than it does.
Monthly vs annual churn
Annual churn is not monthly churn × 12. Each month you can only lose customers you still have, so the losses compound on a shrinking base: annual churn = 1 − (1 − monthly churn)^12. A 2% monthly churn rate is 21.5% a year, not 24%, and 3% a month is 30.6%. To go the other way, monthly churn = 1 − (1 − annual churn)^(1/12).
Average customer lifetime follows from the monthly rate: at 2% a month, the average customer stays 1 ÷ 0.02 = 50 months.
Customer churn vs revenue churn
Customer churn, also called logo churn, counts accounts. Revenue churn counts money. They drift apart whenever customers pay different amounts: losing ten small accounts can push customer churn up while revenue barely moves, and a single enterprise downgrade can do the opposite. Track both.
Net revenue churn subtracts expansion: upgrades, extra seats and add-ons from existing customers. When expansion outweighs what you lose, net churn drops below zero. That is negative churn: your existing customers grow revenue before you sign anyone new, and NRR is above 100%.
What cutting churn is worth
The what-if in the calculator runs two 12-month paths side by side: one at today's churn, one with churn lowered by the share you pick. Cutting churn by 20% means a 2% monthly rate becomes 1.6%. For revenue churn, the cut applies to cancellations and downgrades, and expansion stays as entered.
The gap between the two paths is what churn is costing you. In the calculator's example, 1,000 customers at $100 MRR each, 2% monthly churn and 45 sign-ups a month, a 20% cut leaves 1,319 customers after a year instead of 1,269. That keeps about $32,056 of revenue over the 12 months and adds $4,985 of MRR by the end. Small changes in monthly churn compound into real money.
What is a good churn rate for SaaS?
Mostly it depends on price point: bigger contracts keep customers longer. In SaaS Capital's 2025 retention benchmarks, a survey of more than 1,000 private B2B SaaS companies with at least $1M in ARR:
Median gross revenue retention was 91% a year, and median net revenue retention 101%.
A GRR of at least 90% is what the report calls the minimum to keep pace with peers.
Companies with contracts above $250,000 a year had a median GRR of 95%.
By contract length: month-to-month 89% GRR and 100% NRR, annual contracts 90% and 101%, multi-year contracts 94% and 103%.
A 91% GRR means losing about 9% of revenue a year to cancellations and downgrades, roughly 0.8% a month. Compare yourself with companies at a similar price point rather than a blended average. If you are looking for ways to grow, browse our list of SaaS growth tactics.