Churn Rate
The percentage of customers or revenue that cancels within a given period.
Definition
Churn rate measures the percentage of customers (customer churn) or revenue (revenue churn) lost during a period, typically a month or a year. Customer churn divides customers lost by total customers at the start of the period. Revenue churn divides churned MRR by total MRR. Gross revenue churn measures cancellations and downgrades only; net revenue churn subtracts expansion revenue from existing customers.
Why It Matters
Churn is the silent killer of SaaS businesses. High churn means you are pouring customers into a leaky bucket — no amount of acquisition fixes a retention problem. Even a small improvement in churn has compounding effects: reducing monthly churn from 3% to 2% increases 12-month retention from 69% to 79%.
Example
If you start the month with 500 customers and lose 15, your monthly customer churn rate is 15 ÷ 500 = 3%.