What Is Churn Rate? How to Calculate and Reduce Customer Loss in SaaS
What is Churn Rate?
Churn rate is the percentage of customers who stop using your product or cancel their subscription during a given period. It's one of the most critical metrics in SaaS because it reflects customer satisfaction, product-market fit, and the effectiveness of your Customer Success strategy. A high churn rate can cripple growth — even if you're acquiring new customers at a steady pace.
Why does churn rate matter in SaaS?
Is my churn rate too high?
According to Chartmogul's benchmarks, the average monthly churn rate for SaaS companies is:
- 3–8% for B2C SaaS
- 1–3% monthly (12–36% annually) for B2B SaaS
Best-in-class B2B SaaS companies typically keep net churn under 1% monthly, especially in enterprise segments. Anything above 5% monthly churn is a red flag and suggests deeper retention issues.
How do you calculate churn rate?
The basic formula is:
💡Churn Rate = (Customers Lost During Period ÷ Total Customers at Start of Period) × 100
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