All termsMETRICS & KPIS

Churn

Also known as: Customer Churn · Churn Rate · Logo Churn

DEFINITION

The percentage of customers (or revenue) a SaaS loses in a given period. Low churn compounds growth; high churn silently kills it.

In depth

Two types: Logo Churn (customers lost) and Revenue Churn / MRR Churn (revenue lost). Revenue churn matters more because it weighs by account size — losing one $10K customer hurts more than losing ten $100 customers.

Churn compounds negatively. At 5% monthly churn, you lose ~46% of customers per year. At 1%, you lose 11%. The difference between 5% and 1% churn on the same $1M ARR over 5 years is tens of millions.

Formula & example

Monthly Churn Rate = Customers Lost in Month ÷ Customers at Start of Month
EXAMPLEStarted the month with 500 customers, lost 15 → Churn = 15 ÷ 500 = 3%.

Rules of thumb

  • SMB SaaS: 3–5% monthly churn is typical but still painful.
  • Mid-market: aim for 1–2% monthly.
  • Enterprise: target under 10% annual (0.8% monthly).
  • Negative net MRR churn = expansion exceeds churn = best-in-class.

Common mistakes

  • Ignoring revenue churn and only tracking logo churn.
  • Computing churn without accounting for new customer growth (use cohorts).
  • Calling voluntary and involuntary churn by the same name — failed cards ≠ lost customers.

Put it into practice

tool
Runway Calculator

Related terms

Retention
The opposite of churn — the percentage of customers who stay with you over a given period.
NRR
The percentage of revenue retained from existing customers after accounting for expansion, contraction, and churn.

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Last reviewed 14 April 2026 by Abhi Verma.