Comprehensive Guide
Learn more in our Business & Tax Guide.
How it works
Revenue churn is the percentage of recurring revenue a business loses each period to cancellations and downgrades, measured against recurring revenue at the start of the period. On $48,000 of starting MRR, losing $3,600 is 7.5% gross churn — before expansion revenue from upgrades claws anything back. Subtracting expansion gives net revenue churn, the figure investors quote and the one that decides whether existing-customer revenue grows or shrinks on its own: expansion exceeding losses makes net churn negative, the compounding engine behind the strongest subscription companies. The distinction matters because revenue churn and logo churn tell different truths. Five enterprise cancellations outweigh five hundred solo plans in dollars while looking trivial in logos, so track both — one guards relationships, the other guards revenue. This calculator reports the gross leak, the net position after expansion, the resulting MRR change and a twelve-month projection of the drift. Treat the annualized figure honestly: it multiplies one month by twelve and ignores that churned revenue stops compounding, so it is a planning magnitude, not a forecast. As a working benchmark, monthly gross churn sustained above roughly 5% doubles the leak yearly — at that rate, fixing onboarding and save flows beats buying replacement growth almost every time.Formula
Gross revenue churn = MRR lost / MRR at start x 100 | Net revenue churn = (MRR lost - expansion MRR) / MRR at start x 100
Tips
- Track gross and net churn separately — expansion can hide a worsening leak.
- Split churn reasons: involuntary payment failures are often the easiest win.
- Logo churn and revenue churn disagree — big accounts dominate the dollar figure.
- Negative net churn means growth before any new customer: protect what drives it.
- Sustained gross churn above 5% monthly compounds brutally — fix retention first.
Frequently asked questions
What is revenue churn?
The share of recurring revenue lost in a period to cancellations and downgrades. Losing $3,600 of $48,000 starting MRR is 7.5% monthly gross revenue churn. Unlike logo churn it weighs customers by dollars, so losing one enterprise account moves it more than losing fifty small plans.
How do you calculate net revenue churn?
Subtract expansion MRR from lost MRR, then divide by starting MRR: ($3,600 - $2,100) / $48,000 = 3.1% net. Expansion includes upgrades and add-ons from existing customers — the revenue that offsets the leak before any new logo arrives.
What is a good monthly churn rate?
For subscription businesses, roughly 1-2% monthly gross revenue churn is solid for SMB products and lower still for enterprise; above 5% monthly the loss doubles yearly. Benchmarks vary by segment — compare within your own pricing tier and contract length.
Can net revenue churn be negative?
Yes, and it is a badge of honor: when expansion from existing customers exceeds what cancellations remove, net churn goes negative and revenue grows with zero new customers. Sustaining it requires genuine upsell motions, not accounting tricks.
What's the difference between logo churn and revenue churn?
Logo churn counts cancelled accounts equally regardless of size; revenue churn counts the dollars leaving. Ten small cancellations may be 1% of logos but 0.2% of revenue, while one enterprise departure flips that. Healthy dashboards show both.