Calculate Churn
SaaS Churn Rate Calculator: The Key Growth Metric
In the world of Software as a Service (SaaS), growth isn't just about how many new customers you acquire; it's about how many you keep. Churn rate is the silent killer of subscription businesses. If you are losing customers faster than you are gaining them, your "leaky bucket" will eventually empty.
What is SaaS Churn Rate?
Churn rate is the percentage of subscribers who cancel or fail to renew their subscriptions during a specific time period (usually monthly or annually). While every business experiences some level of churn, high-performing SaaS companies strive for a churn rate that is as low as possible.
The Churn Rate Formula
Calculating your logo (customer) churn rate is straightforward:
Example Calculation
Let's say your SaaS platform starts the month of October with 1,200 active subscribers. By October 31st, you see that 60 of those original subscribers have canceled their accounts.
- Starting Customers: 1,200
- Lost Customers: 60
- Calculation: (60 / 1,200) = 0.05
- Result: 5% Monthly Churn Rate
Customer Churn vs. Revenue Churn
While tracking the number of customers (Logo Churn) is important, Revenue Churn tells you the financial impact. This is critical for tiered pricing models where losing one "Enterprise" customer might hurt more than losing ten "Starter" customers.
| Metric | What it Measures | Why it Matters |
|---|---|---|
| Customer Churn | Percentage of users lost. | Measures product-market fit and user satisfaction. |
| Gross Revenue Churn | Percentage of MRR lost from cancellations. | Measures the direct financial health of the business. |
| Net Revenue Churn | Lost MRR minus Expansion MRR (Upsells). | Shows if you can grow even without adding new customers. |
What is a Good Churn Rate for SaaS?
Benchmarks vary significantly based on your target market:
- Enterprise SaaS: 1% monthly churn (or lower) is common due to multi-year contracts.
- SMB SaaS: 3% – 7% monthly churn is typical as small businesses are more price-sensitive and prone to closing.
- B2C SaaS: Can see 10%+ monthly churn depending on the niche (e.g., entertainment or fitness).
3 Ways to Reduce Your Churn Rate
If your calculator results are higher than you'd like, consider these strategies:
- Improve Onboarding: Most users churn because they don't reach the "Aha!" moment fast enough. Guide them to value within the first 24 hours.
- Analyze "Churn Reasons": Use exit surveys. If people are leaving because of price, consider a "pause" feature. If it's features, update your roadmap.
- Target the Right Customers: Sometimes high churn is a sales problem. Selling to customers who don't actually need your tool leads to inevitable cancellations.