SaaS churn rate: definition and benchmarks
The SaaS churn rate measures the share of customers (logo churn) or recurring revenue (revenue churn) lost over a given period. It is expressed as a percentage of the starting base or revenue. It is the central indicator of a subscription model's health, but how you read it depends on the type of churn measured.
In short
- The churn rate expresses a loss over a period, in customers or in revenue.
- Logo churn and revenue churn do not tell the same story and are read together.
- What matters is not a universal threshold, but the trend and the weight of the accounts lost.
Definition of the churn rate
The churn rate relates what you lost over a period to what you had at the start. Measured on customers, it is called logo churn; measured on recurring revenue, it is called revenue churn.
The period matters as much as the formula. A monthly rate and an annual rate do not carry the same meaning, and comparing two rates calculated over different windows makes no sense.
Logo churn and revenue churn
Logo churn counts the accounts lost, whatever their weight. Revenue churn counts the revenue lost. The two diverge as soon as your accounts do not all carry the same value.
Losing ten small accounts or a single large one can give the same logo churn but a very different revenue churn. That is why an Account Manager reasons first in exposed revenue, where a Customer Success Manager also watches the number of accounts.
Gross churn and net churn
Gross churn isolates the pure loss, without accounting for expansion. Net churn deducts from the lost revenue the upsells and cross-sells made on the existing base. A low, even negative, net churn means expansion offsets departures.
The two readings are complementary: net churn can flatter a fragile base offset by a few large upsells, where gross churn reveals the real solidity of retention.
How to read your churn rate
There is no universal threshold for a good churn rate: it depends on the segment, the sales cycle and the product's maturity. What matters is the trend over time and the weight of the accounts involved.
A stable rate concentrated on your largest accounts is more worrying than a slightly higher rate spread across small accounts. The figure alone is not enough: you need to know who is leaving and why.
Logo churn or revenue churn
Two measures of the same phenomenon, which complete each other.
How Phano helps you
Measuring the churn rate tells you where you stand; Phano acts on what brings it down. By surfacing at-risk accounts early, with their probable cause and the action to take, Phano tackles churn before it materializes in the metric. The Customer Success Manager protects the number of accounts, the Account Manager protects the exposed revenue.
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Frequently asked questions
What is the churn rate formula?
The churn rate relates the customers (or revenue) lost over a period to the starting base (or revenue), expressed as a percentage. The Calculate your churn page details the variants depending on what you measure.
What is a good SaaS churn rate?
There is no universal threshold: it depends on the segment, the price and the sales cycle. More useful than aiming for an absolute figure, you look at the trend and the weight of the accounts lost.
Should you track logo churn or revenue churn?
Both. Logo churn tracks the number of accounts, revenue churn tracks the revenue. They diverge as soon as your accounts do not all carry the same value, which is almost always the case in B2B.
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