SaaS Churn Rate Calculator
Measure your customer retention and revenue health in seconds.
What is Churn Rate in SaaS?
Churn rate is a critical metric for Software as a Service (SaaS) companies that represents the percentage of customers or revenue lost during a specific timeframe. In a subscription-based business model, growth is only possible if your customer acquisition rate exceeds your churn rate.
How to Calculate Customer Churn
The standard formula for customer churn is simple: Divide the number of customers lost during a period by the total number of customers you had at the beginning of that period. Multiply by 100 to get a percentage.
Formula: (Lost Customers / Starting Customers) x 100
Suppose your SaaS company starts the month with 1,000 active subscribers. During that month, 50 subscribers cancel their plans.
Calculation: (50 / 1,000) * 100 = 5% Monthly Churn Rate.
Why Revenue Churn Matters
While customer churn tells you how many people are leaving, Revenue Churn (Gross MRR Churn) tells you the financial impact. This is particularly important if you have multiple pricing tiers. Losing one "Enterprise" client might hurt more than losing ten "Basic" plan users.
What is a "Good" Churn Rate?
- Early Stage SaaS: 10-15% monthly churn is common but should be reduced quickly.
- Established SMB SaaS: 3-5% monthly churn is a standard benchmark.
- Enterprise SaaS: Aim for < 1% monthly churn or "Negative Churn" (where expansion revenue from existing customers exceeds the revenue lost from cancellations).
3 Ways to Reduce Your Churn Rate
1. Improve Onboarding: Ensure customers reach their "Aha!" moment as quickly as possible.
2. Identify At-Risk Users: Monitor login activity. If a user hasn't logged in for 10 days, trigger an automated re-engagement email.
3. Collect Exit Feedback: Always ask why a customer is leaving. This data is gold for improving your product roadmap.