What Is Your Churn Rate, Monthly and Annual?
What this calculates
Churn rate is the share of customers or revenue you lose in a period. This calculates the monthly logo rate from customers lost against customers at the start, compounds it into an annual figure, and reports revenue churn separately. The two rarely match, and the gap between them is the useful part.
A SaaS company losing 12 of 500 customers in a month has a monthly churn rate of 2.4 percent, which compounds to 25.3 percent over a year rather than the 28.8 percent a simple multiplication would suggest.
Your numbers
Customers
Revenue, optional
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Monthly churn rate
Live2.4%
25.3% a year once it compounds
- Annual churn rate
- 25.3%
- Monthly revenue churn
- 1.9%
- Annual revenue churn
- 20.6%
- Customers left after a year
- 374
Watch
A monthly churn rate of 2.4% compounds to 25.3% over a year, which sits between the best performers in ChartMogul’s data and the bottom quartile of companies at your stage. It is not an emergency, and it is not free either. At this rate 500 customers become 374 in twelve months. Revenue churn of 1.9% sits below logo churn, which is the ordinary pattern, because the accounts leaving are smaller than the ones staying.
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How is churn rate calculated?
Monthly logo churn divides the customers you lost by the customers you started the month with. Annualizing it compounds that rate across twelve months rather than multiplying it, because each month churns a base the month before already made smaller. Revenue churn runs the same division on MRR, and it answers a different question about the same month.
Formula
Monthly logo churn = customers lost ÷ customers at the start Annual churn = 1 − (1 − monthly churn)12 Monthly revenue churn = MRR churned ÷ MRR at the start Customers left after a year = customers at the start × (1 − monthly churn)12 Multiplying monthly churn by twelve overstates the annual figure. At 2.4% a month the difference is 3.5 points.
- Customers lost means cancellations and non-renewals. A customer who downgrades is still a customer, so a downgrade belongs in revenue churn and nowhere in the logo count.
- The annual figure holds this month’s rate steady for twelve months. No company churns at a flat rate, which is why this is a projection of one month rather than a measurement of a year.
- MRR churned excludes expansion and contraction from existing accounts. This is gross revenue churn. Net revenue retention, which nets expansion against it, is a separate metric and the Net Revenue Retention Calculator computes it.
- Customers acquired during the month are excluded from both the start count and the loss count. Including them flatters the rate, because new customers have had less time to leave.
- Involuntary churn from failed payments is counted here as churn, because the customer is gone either way. Whether it is recoverable is a question about your dunning process rather than about this number.
When this number misleads
A single month of churn on a small base is noise, not a signal. At 500 customers one extra cancellation moves the monthly rate by 0.2 points and the annualized figure by more than 2. Below about 200 customers the number swings so hard month to month that a three-month average is the only version worth reading. The other trap is annual contracts. A company billing yearly can post several months of near-zero churn and then lose a quarter of its base in the renewal month, which is exactly what a churn spike after early growth usually turns out to be.
What is a good churn rate for SaaS?
A monthly logo churn rate under 1.2 percent is best-in-class and anything over 5 percent a month is below the bottom quartile of companies at the same stage. Most B2B SaaS companies sit between those two figures. The bands below are published twelve-month retention rates converted to their monthly equivalents.
| Monthly logo churn | Annual equivalent | Where that sits |
|---|---|---|
| Under 1.2% | Under 13.5% | Best in class, the 90th percentile of customer retention |
| 1.2% to 5.0% | 13.5% to 45.6% | Where the median SaaS company falls, whatever its ARR |
| Over 5.0% | Over 45.6% | Below the bottom quartile at $1m to $3m ARR |
Those edges come from ChartMogul’s SaaS Retention Report, which studied more than 2,100 SaaS businesses. ChartMogul measures customer retention across twelve months rather than one, so its figures had to be converted before they could sit next to a monthly rate. Its 90th percentile keeps about 86 percent of customers over a year, which is the 1.2 percent monthly edge. Its 25th percentile in the $1m to $3m ARR band keeps 54.4 percent, which is the 5 percent edge.
ChartMogul’s medians move less by company size than founders expect. A median company under $300k ARR keeps 54.8 percent of its customers over a year. At $15m to $30m ARR the median keeps 71.8 percent. Scale improves churn, and it improves it slowly.
On the compounding itself, Recurly’s churn benchmark research makes the same point this tool is built on: annual churn is not twelve times monthly churn, because each month churns the base the previous month already reduced. Recurly reports a median annual churn of 3.22 percent across its subscription network, which spans consumer subscriptions as well as SaaS, so read it as a statement about the arithmetic rather than a B2B benchmark. When churn caps what a company can reach, the Growth Ceiling Calculator takes the monthly rate from this page and turns it into a revenue limit.
Questions founders ask about this
What is a good monthly churn rate for SaaS?
Under 1.2 percent a month is best-in-class. That figure is ChartMogul’s 90th percentile for customer retention, about 86 percent kept over a year, converted to a monthly rate. The median SaaS company sits between 2.7 and 4.9 percent a month depending on its ARR band, and past 5 percent a month you are below the bottom quartile of companies at the $1m to $3m stage.
Why is annual churn not twelve times monthly churn?
Because each month churns a base the previous month already shrank. At 2.4 percent a month the multiplication says 28.8 percent a year and the compounding says 25.3 percent. Recurly makes the same point in its benchmark research. The gap widens as the rate rises, so the shortcut is at its most wrong exactly where the number matters most.
Should I measure customer churn or revenue churn?
Both, side by side, because the gap between them is the finding. Revenue churn below logo churn means you are losing your smaller accounts, which is the ordinary pattern. Revenue churn above logo churn means the accounts leaving are bigger than your average, and that is a different problem with a different fix.
Do downgrades count as churn?
Not in the customer count. A customer who moves from a $500 plan to a $200 plan is still a customer, so the logo rate does not see them. The $300 belongs in revenue churn. Counting a downgrade as a lost customer double-counts a loss you have already measured in dollars.
Do you store what I enter?
No. The calculation runs in your browser and nothing is transmitted. Your last inputs are saved in your own browser so the page remembers them when you return. If you use the email field, only the result summary and your address are sent.
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