SaaS Churn Rate Calculator
Measure your customer and revenue retention health.
What is SaaS Churn Rate?
In the Software as a Service (SaaS) world, Churn Rate is the percentage of customers or revenue that your business loses during a specific time frame. It is the antithesis of growth. While acquiring new customers is vital, high churn can act as a "leaky bucket," making it impossible to scale sustainably.
How to Calculate Customer Churn
The standard formula for customer churn is simple but powerful:
Revenue Churn vs. Customer Churn
While customer churn tracks people, Revenue Churn (MRR Churn) tracks dollars. This is often more important for SaaS businesses with tiered pricing. If you lose one "Enterprise" customer paying $1,000/month, it impacts your business more than losing ten "Basic" customers paying $10/month.
SaaS Churn Benchmarks
What is a "good" churn rate? It varies by company stage and target market:
| Market Segment | Good Monthly Churn | Acceptable Monthly Churn |
|---|---|---|
| SMB (Small Business) | 2% – 3% | 5% – 7% |
| Mid-Market | 1% – 2% | 3% – 5% |
| Enterprise | < 1% | 1% – 2% |
Example Calculation
Imagine your SaaS started the month with 500 customers and $25,000 in MRR. By the end of the month, 20 customers cancelled their subscriptions, representing $1,250 in lost MRR.
- Customer Churn: (20 / 500) = 4%
- Revenue Churn: (1,250 / 25,000) = 5%
- Customer Lifetime: 1 / 0.04 = 25 months
A 4% churn rate suggests your average customer stays with you for approximately 25 months. Reducing this to 2% would double the average customer lifetime to 50 months.