Churn Rate

What is Churn Rate?

Churn rate measures the percentage of customers (logo churn) or revenue (revenue churn) you lose over a period. It's the inverse of retention and one of the most critical metrics for subscription businesses.

High churn is a business killer. If you're churning 5% of customers monthly, you're losing over 45% of your customer base annually. That means nearly half your sales effort just maintains the status quo.

Logo Churn vs Revenue Churn

Logo churn counts customers lost. Revenue churn counts dollars lost. They often differ significantly. Losing ten $100/month customers hurts more than losing one $50/month customer, but logo churn treats them equally.

Smart companies track both. Logo churn reveals product satisfaction. Revenue churn reveals whether you're losing your best or worst customers.

What's a Good Churn Rate?

For SMB SaaS: 3-5% monthly churn is common. For mid-market: 1-2% monthly. For enterprise: less than 1% monthly (or 5-7% annually). Consumer subscriptions often see higher churn than B2B.

Monthly metrics:

• Customers at start: 500
• Customers lost: 15
• Starting MRR: $100,000
• MRR lost: $4,500

Logo Churn = 15 ÷ 500 = 3% monthly

Revenue Churn = $4,500 ÷ $100,000 = 4.5% monthly

Revenue churn is higher, meaning larger customers are leaving. That's a red flag worth investigating.