Churn Rate

The percentage of customers or revenue lost in a given period — the most direct measure of how well your product retains the customers it acquires.

Formula 1 — Customer Churn Rate

Customer Churn Rate = Customers Lost ÷ Customers at Start × 100

Formula 2 — Revenue Churn Rate

Revenue Churn Rate = MRR Lost ÷ MRR at Start × 100

What is churn rate?

Churn rate is the percentage of your customer base (or revenue base) that you lose over a defined time period — typically one month. It's the opposite of retention: every churned customer is a customer who chose not to continue paying for your product.

There are two distinct churn metrics, and both matter. Customer churn counts the number of accounts lost. Revenue churn (also called MRR churn) counts the revenue value of those lost accounts. The two can diverge significantly — if your highest-value customers churn, revenue churn will be worse than customer churn, and vice versa.

Customer churn rate: step-by-step

Count the number of paying customers at the start of the period.
Count the number who cancelled during the period.
Divide cancellations by starting customers, multiply by 100.

Customer Churn Example

Customers at start of month 500

Customers who cancelled 10

Customer Churn Rate 10 ÷ 500 × 100 = 2.0%

Revenue churn rate: step-by-step

Record total MRR at the start of the period.
Sum the MRR value of all subscriptions that cancelled during the period (do not include downgrades — those are tracked separately).
Divide lost MRR by starting MRR, multiply by 100.

Revenue Churn Example

MRR at start of month $50,000

MRR lost to cancellations $800

Revenue Churn Rate $800 ÷ $50,000 × 100 = 1.6%

Churn rate benchmarks

What constitutes healthy churn depends heavily on your market segment and average contract value. Enterprise customers churn far less than self-serve SMB customers — and that's expected.

Segment	Acceptable Monthly Churn	Good Monthly Churn
Enterprise SaaS	< 1%	< 0.5%
B2B SaaS (SMB)	0.5–2%	< 1%
B2C SaaS	2–5%	< 2%

To put monthly churn in annual terms: 2% monthly churn compounds to roughly 22% annual churn. At 5% monthly, you're replacing over half your customer base every year.

Voluntary vs. involuntary churn

Not all churn is created equal. Voluntary churn happens when a customer actively cancels — they've decided the product isn't worth the cost. Involuntary churn (also called delinquent churn) happens when a payment fails and the subscription lapses.

Involuntary churn typically accounts for 20–40% of total churn for self-serve SaaS products. It's also the easiest to recover: implement automated dunning emails, retry logic, and in-app payment update prompts. Recovering failed payments costs far less than acquiring new customers.

Common churn calculation mistakes

Including new customers in the denominator. Customers acquired mid-month shouldn't count in monthly churn calculations — they haven't had a full period to churn yet. Use only customers who were active at the start of the period.
Confusing customer churn and revenue churn. These tell different stories. Always report both and note when they diverge significantly — it reveals whether you're losing high-value or low-value customers.
Ignoring cohort churn. Average monthly churn hides the shape of churn. A cohort analysis shows whether churn is front-loaded (most customers leave in month 1–3) or distributed evenly, which points to very different solutions.
Treating downgrades as churn. Downgrades reduce your revenue but the customer is still paying you. Track them separately as downgrade MRR — they're a distinct problem with distinct solutions.

Track churn rate automatically from Stripe

Abner calculates both customer churn and revenue churn from your Stripe data, updated daily. See trends over time and catch churn spikes before they become a crisis.