Revenue Churn Rate Calculation

Revenue Churn Rate Calculator

Results

Gross Revenue Churn

0.00%

Net Revenue Churn

0.00%

function calculateRevenueChurn() { var startingMRR = parseFloat(document.getElementById('startingMRR').value); var lostMRR = parseFloat(document.getElementById('lostMRR').value); var expansionMRR = parseFloat(document.getElementById('expansionMRR').value) || 0; var resultsDiv = document.getElementById('churnResults'); if (isNaN(startingMRR) || isNaN(lostMRR) || startingMRR <= 0) { alert('Please enter valid numerical values for Starting MRR and Lost MRR.'); return; } // Gross Revenue Churn = (Lost MRR / Starting MRR) * 100 var grossChurn = (lostMRR / startingMRR) * 100; // Net Revenue Churn = ((Lost MRR – Expansion MRR) / Starting MRR) * 100 var netChurn = ((lostMRR – expansionMRR) / startingMRR) * 100; document.getElementById('grossResult').innerText = grossChurn.toFixed(2) + "%"; document.getElementById('netResult').innerText = netChurn.toFixed(2) + "%"; var description = "Your Gross Revenue Churn of " + grossChurn.toFixed(2) + "% represents the total revenue lost from your existing customer base. "; if (netChurn < 0) { description += "Your Net Revenue Churn is negative (" + netChurn.toFixed(2) + "%), which is excellent! This means expansion revenue from existing customers is growing faster than revenue lost through churn."; } else { description += "Your Net Revenue Churn of " + netChurn.toFixed(2) + "% accounts for expansion revenue that helps offset your losses."; } document.getElementById('churnDescription').innerHTML = description; resultsDiv.style.display = 'block'; }

Understanding Revenue Churn Rate

Revenue churn rate is a critical metric for subscription-based businesses (SaaS). Unlike customer churn, which tracks the number of people leaving, revenue churn tracks the monetary value lost. This distinction is vital because losing a single enterprise customer paying $5,000/month impacts your business far more than losing five small customers paying $50/month.

Gross Churn vs. Net Churn

When calculating revenue churn, there are two primary formulas used by growth experts:

• Gross Revenue Churn: This is the percentage of revenue lost due to cancellations and downgrades. It does not account for any new revenue from existing customers. It provides the "worst-case scenario" of revenue leakage.
• Net Revenue Churn: This accounts for "Expansion Revenue" (upsells, cross-sells, or seat additions). If your existing customers spend more than what is lost through cancellations, you can achieve Negative Churn, which is the "Holy Grail" of SaaS growth.

The Formulas

Gross Revenue Churn % = (Lost MRR / Starting MRR) × 100

Net Revenue Churn % = [(Lost MRR – Expansion MRR) / Starting MRR] × 100

Real-World Example

Imagine your company starts the month with $100,000 in Monthly Recurring Revenue (MRR).

1. Three customers cancel their subscriptions, totaling $4,000 in lost revenue.
2. Five customers downgrade their plans, totaling $1,000 in lost revenue.
3. Existing happy customers upgrade their plans, adding $2,000 in new revenue (Expansion).

Calculations:

• Lost MRR: $4,000 + $1,000 = $5,000
• Gross Churn: ($5,000 / $100,000) = 5%
• Net Churn: [($5,000 – $2,000) / $100,000] = 3%

What is a "Good" Revenue Churn Rate?

While target rates vary by industry and customer size, SaaS benchmarks generally suggest:

Customer Segment	Target Annual Revenue Churn
Enterprise	< 5% per year
Mid-Market	5% – 10% per year
SMB / B2C	15% – 30% per year