churn: definition
The churn rate: the share of customers (or revenue) you lose over a period. It is the leak at the bottom of the bucket.
By Isidore Mikorey-Nilsson · May 28, 2026
Definition
Churn measures the customers or revenue that leave over a month or a year. In a SaaS, it is just as decisive as acquisition: above a certain threshold, you fill the bucket faster than it empties, but you are not actually moving forward. Customer churn (count) is distinguished from revenue churn (amount), which can be offset by upgrades.
How to calculate it
Churn rate = customers lost over the period / customers at the start of the period
Why it matters
Churn is the silent killer of a SaaS: it caps your growth no matter how much you push on acquisition, and it crushes your LTV. Cutting your churn by one point often has more impact on your company's value than winning new customers.
When to use it
It is tracked every month, alongside an effort to understand why people leave (poor onboarding, value not reached, price). Concretely, before putting more budget into acquisition, you check that the bucket is not leaking, otherwise you are filling it at a loss.
Example
If you start the month with 200 customers and lose 6, your monthly churn is 3%.
Common mistakes
- Only tracking customer churn while ignoring revenue churn.
- Putting more budget into acquisition before plugging the leak.
- Confusing gross churn with net churn (expansion deducted).
Don't confuse it with
- mrr: Churn is what erodes MRR; net MRR is the figure once churn is deducted from new revenue.
Related terms
Articles that use this term
Frequently asked questions
- What churn rate is acceptable?
- It depends on the market, but in B2B SaaS a monthly churn under 2 to 3% is generally considered healthy.