What Is Churn Rate?
Churn rate is the percentage of customers (logo churn) or recurring revenue (revenue churn) lost over a period. It's the biggest drag on SaaS growth: even modest monthly churn compounds, capping how large the business can get no matter how fast you acquire.
Key takeaways
- Logo churn counts lost customers; revenue churn counts lost MRR or ARR.
- Customer churn = customers lost ÷ customers at start of period.
- Pair churn with NRR — expansion can offset churn even when logos leave.
The two churn formulas
Logo churn = Customers lost ÷ Customers at start • Revenue churn = MRR lost ÷ MRR at start
Logo churn vs revenue churn
| Type | Measures | Why it matters |
|---|---|---|
| Logo churn | Count of customers lost | Customer-base health |
| Gross revenue churn | MRR lost (no expansion) | Worst-case retention |
| Net revenue churn | MRR lost minus expansion | Can go negative (good) |
Why churn compounds
At 3% monthly logo churn you lose roughly 30% of customers a year — and the loss compounds, because each month's churn applies to a base already shrunk by the last. That's why mature SaaS teams obsess over retention before acquisition.
Frequently asked questions
What's a good churn rate?
For B2B SaaS, annual logo churn under ~5–7% is strong; monthly revenue churn under ~1% is excellent. Lower-ACV, SMB-focused products typically run higher churn than enterprise.
What's the difference between gross and net revenue churn?
Gross revenue churn counts only lost revenue and can't be better than 0%. Net revenue churn subtracts expansion from churn, so a healthy base can post negative net churn.
How do you reduce churn?
Improve onboarding and time-to-value, monitor health scores to catch at-risk accounts early, and drive product adoption — most churn is decided long before the renewal date.
Related service: Catch at-risk accounts early with HubSpot