Glossary / Churn Rate
Churn Rate
Churn rate is the percentage of customers (or revenue) that a business loses in a given period. Logo churn measures customer count loss; revenue churn measures dollar loss. Churn rate is calculated as customers lost divided by customers at start of period. Reducing churn is often more leverage than acquiring new customers because retained customers compound.
Formula
Logo churn rate = Customers lost in period / Customers at start of period × 100
Example
If a SaaS business started the month with 100 customers and lost 3, monthly logo churn is 3%. Annualized that's roughly 36% — meaning a third of customers leave each year. For SaaS, monthly churn under 1% is typical for healthy SMB-focused products.
Why it matters
Churn is the leak in the bucket. Reducing churn from 5% to 3% per month has more compounding impact than adding 30% more new customers, because every retained customer continues paying for years.
Frequently asked
What's the difference between logo churn and revenue churn?
Logo churn counts customers lost. Revenue churn counts dollars lost. They diverge when a business has a mix of small and large customers — losing one large customer can spike revenue churn even when logo churn looks fine.
Should I include downgrades in churn?
Downgrades are tracked as 'contraction' in revenue churn but typically not in logo churn. The combined number is usually called 'net revenue churn' and includes downgrades minus upgrades.
Related terms
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