Churn Rate
The percentage of customers or revenue a company loses over a given period, typically measured monthly or annually.
Churn rate measures attrition — either the percentage of customers who cancel (logo churn) or the percentage of recurring revenue lost to cancellations and downgrades (revenue churn) over a defined period. Low churn is essential for a healthy recurring-revenue business, since high churn forces a company to constantly replace lost revenue just to stand still, let alone grow.
Logo churn and revenue churn can tell very different stories: a company can lose a lot of small customers (high logo churn) while retaining nearly all its revenue if its largest accounts stay, which is common in businesses with concentrated enterprise customers alongside a long tail of smaller ones.
Monthly churn rate = customers (or revenue) lost during the month / customers (or revenue) at the start of the monthA company starts the month with 500 customers and loses 15 to cancellation during the month. Monthly logo churn = 15 / 500 = 3%, which annualizes to roughly 30% if that rate holds steady.
Segment churn by customer cohort, contract size, and time-since-signup rather than reporting one blended number — early-tenure churn (customers leaving in their first 90 days) usually signals an onboarding problem, while later churn often signals a product-value or competitive problem, and the fixes are completely different.
What's a good monthly churn rate for a SaaS company?
Under 1% monthly (roughly under 12% annualized) is considered strong for B2B SaaS, though acceptable churn varies by customer segment — SMB-focused products typically tolerate higher churn than enterprise-focused ones.
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