SaaS Churn Rate Calculator
Customer Churn Rate:
0%
Revenue Churn Rate:
0%
Customer Retention Rate:
0%
Understanding SaaS Churn Rate
Churn rate is the most critical health metric for any SaaS (Software as a Service) business. It measures the rate at which customers cancel their subscriptions over a specific period. High churn indicates a lack of product-market fit or poor customer experience, while low churn suggests strong "stickiness" and sustainable growth.
1. Customer Churn Rate
This is the percentage of your total customer base that leaves within a month or year. It is calculated by dividing the number of customers lost during the period by the number of customers you had at the very beginning of that period.
2. Revenue (MRR) Churn Rate
Revenue churn measures the percentage of Monthly Recurring Revenue (MRR) lost. This is often more important for SaaS companies with different pricing tiers. If you lose one high-ticket enterprise customer, your revenue churn will be much higher than losing ten "basic plan" customers, even if the customer churn count looks small.
Example Calculation:
If you start the month with 500 customers and lose 25 by the end of the month:
Customer Churn = (25 / 500) * 100 = 5%.
If those 500 customers represented $10,000 in MRR and the 25 lost customers represented $1,000:
Revenue Churn = ($1,000 / $10,000) * 100 = 10%.
If you start the month with 500 customers and lose 25 by the end of the month:
Customer Churn = (25 / 500) * 100 = 5%.
If those 500 customers represented $10,000 in MRR and the 25 lost customers represented $1,000:
Revenue Churn = ($1,000 / $10,000) * 100 = 10%.
How to Reduce Your Churn Rate
- Improve Onboarding: Ensure users find the "Aha!" moment quickly after signing up.
- Identify At-Risk Users: Monitor login frequency and feature usage to trigger proactive support.
- Annual Plans: Encourage users to switch from monthly to annual billing; annual users typically have higher retention.
- Exit Surveys: Always ask why a customer is leaving to identify patterns in product gaps or pricing issues.