Value Metric
Churn Rate
Churn Rate is the percentage of customers (or revenue) lost over a period — the inverse of retention.
What is Churn Rate?
Churn Rate measures the share of customers, or recurring revenue, that you lose in a given period. Customer (logo) churn counts departing accounts; revenue churn counts lost dollars, which can differ sharply if the customers who leave are unusually large or small.
Churn is the leak in the bucket. Because acquisition is expensive, even small reductions in churn dramatically improve lifetime value and the efficiency of your entire growth model.
How to calculate it
Churn Rate = Customers Lost in Period ÷ Customers at Start of Period × 100
- Customers Lost
- Customers who cancelled during the period
- Customers at Start
- Total customers at the start of the period
Worked example
If you began the month with 2,000 customers and 60 cancelled, monthly churn = 60 ÷ 2,000 × 100 = 3%.
What good looks like
- Good monthly churn (SaaS)< 2% (SMB) · < 1% (enterprise)
Lower is better; annual logo churn under ~5–7% is strong for B2B. Consumer products run much higher.
Source: Paddle / ProfitWell
Why it matters
Churn caps how big you can grow: at 5% monthly churn, you lose nearly half your customers a year, so acquisition just treads water. Because retained customers are far cheaper than new ones, reducing churn is usually the highest-leverage growth investment — and rising churn is the earliest sign that value or fit is slipping.
How to improve Churn Rate
Diagnose why customers leave
Interview churned customers and analyze the behaviors that precede cancellation to find the real drivers.
Strengthen onboarding and early value
Most churn traces back to weak activation. Getting users to value faster lifts retention across every later cohort.
Frequently asked questions
What is a good churn rate?
For B2B SaaS, monthly logo churn under 2% (SMB) or under 1% (enterprise) is considered healthy, translating to annual churn in the mid-single digits. Consumer and freemium products typically see much higher churn and rely on scale to compensate.
What is the difference between customer churn and revenue churn?
Customer (logo) churn counts the number of customers lost; revenue churn counts the recurring revenue lost. They diverge when the customers leaving are larger or smaller than average — a few big departures can spike revenue churn even at low logo churn.