SaaS Churn Rate Calculator
Calculate your Customer and Revenue Churn accurately
What is SaaS Churn Rate?
In the Software as a Service (SaaS) industry, churn rate is the percentage of customers or revenue lost over a specific period. It is the single most critical metric for long-term sustainability. If your churn rate exceeds your acquisition rate, your business will eventually shrink to zero.
How to Calculate Customer Churn
The standard formula for Customer Churn is simple: (Total Customers Lost during period / Total Customers at start of period) x 100. For example, if you start the month with 1,000 customers and lose 50, your churn rate is 5%.
Example Calculation:
Start: 500 users
Lost: 25 users
Calculation: (25 / 500) * 100 = 5% churn.
Customer Churn vs. Revenue Churn
While Customer Churn tracks the number of logos lost, Revenue Churn (MRR Churn) tracks the dollar amount lost. This is often more important for SaaS companies with multiple pricing tiers. You might lose 10% of your customers (low-tier) but only 2% of your revenue if your high-paying enterprise clients stay loyal.
What is a Good Churn Rate for SaaS?
Benchmarks vary by market segment:
- SMB SaaS: 3% – 7% monthly churn is common but high.
- Mid-Market: 1% – 2% monthly churn is the target.
- Enterprise SaaS: Less than 1% monthly churn (or negative churn) is the gold standard.
Strategies to Reduce Churn
To improve your retention, focus on improving your onboarding process, implementing a proactive customer success program, and using "Exit Surveys" to understand why users are leaving. Even a 1% reduction in churn can lead to a massive increase in Customer Lifetime Value (LTV) over several years.