Churn rate

The share of customers who leave in a given period — the leak in the bucket that quietly decides how much every customer you win is really worth.

In plain English

Churn rate measures how fast you're losing customers. Every period, some subscribers cancel, and churn expresses that loss as a percentage of where you started. It matters enormously because growth is a tug-of-war: new customers pull MRR up, churned customers drag it down. A business adding 6% in new customers but churning 5% is barely moving, while one churning 1% keeps almost everything it wins. Churn also sets a hard ceiling on lifetime value — if customers stay an average of 20 months, no amount of clever pricing changes the fact that you only get 20 months to earn from each one.

The formula

Customer (logo) churn = Customers lost in period ÷ Customers at start of period

This is logo churn — it counts accounts, not euros; track revenue churn alongside it to capture downgrades and the weight of larger accounts.

A worked example

Say you began the month with 400 customers and, by the end of it, 12 had cancelled. Divide the losses by the starting count.

Monthly churn = 12 ÷ 400 = 3%

So you're losing 3% of your customer base every month. Compounded over a year that's roughly a third of your customers gone — which is exactly why even a "small-sounding" monthly churn quietly caps how big the business can get.

What's a good churn rate?

Acceptable churn depends heavily on who you sell to — SMB customers naturally churn more than locked-in enterprise accounts:

Monthly customer churn	Verdict	Typical context
< 1%	Excellent	Enterprise, sticky contracts
3–5%	Normal for SMB	Self-serve, smaller accounts
> 5%	Too high	Caps LTV and starves growth

The headline rule: high churn caps LTV no matter how well you acquire. Enterprise SaaS often targets under 5–7% annually, while a self-serve product living at 5% monthly has to keep winning fast just to stand still.

Frequently asked questions

What is a good churn rate?

It depends on who you sell to. For SMB and self-serve SaaS, 3 to 5 percent monthly churn can be normal. Enterprise products should be well under 1 percent monthly, or under 5 to 7 percent annually. Lower is always better, because churn directly caps how much each customer can be worth.

How do you calculate churn rate?

Divide the number of customers lost during a period by the number of customers you had at the start of that period. If you began the month with 400 customers and lost 12, your monthly churn rate is 12 divided by 400, which is 3 percent.

What's the difference between customer churn and revenue churn?

Customer churn, also called logo churn, counts how many accounts leave. Revenue churn measures how much recurring revenue you lose, including downgrades. Losing one large customer can mean low logo churn but high revenue churn, so most teams track both.

Net revenue retention · Revenue churn · Customer lifetime value (LTV) · Quick ratio

Learn more

The complete guide to value-based bidding · Value-based bidding without a data team