How to calculate SaaS churn rate

Churn is how much business you lost in a period. Solo founders usually track it monthly. Get the formula right first. Wrong math makes a healthy business look broken (or the reverse).

Gross churn (MRR)

Share of MRR lost from cancellations only:

Gross MRR churn % = Churned MRR ÷ MRR at start of period × 100

Example: you started June with $5,000 MRR. Cancellations removed $250. Gross churn is 5%.

Net churn (MRR)

Includes upgrades and downgrades, not just cancellations:

Net MRR churn % = (Churned MRR − Expansion MRR) ÷ MRR at start × 100

If you lost $250 to churn but gained $100 from upgrades, net churn is ($250 − $100) ÷ $5,000 = 3%. Net churn can be negative when expansion beats cancellations. That is a good sign.

Customer churn vs revenue churn

Customer churn counts logos: 2 of 40 customers left = 5% customer churn. Revenue churn counts dollars. One big customer leaving hurts MRR more than several small ones. Track revenue churn if you have a wide range of deal sizes.

Common mistake

Do not divide churned MRR by ending MRR or by new MRR. Always use MRR at the start of the period. Mixing bases is the most common spreadsheet error.

What is a good number?

Early-stage B2B SaaS often lands around 3–7% gross MRR churn per month. Lower is better. Context matters: one bad month is not a trend. Look at 3-month rolling averages.

Pair churn with MRR each week. Rising churn the same week you changed pricing is a clue worth testing, not just a bad number on a chart.