Guide
How to Calculate SaaS Churn Rate (Without the Usual Denominator Mistakes)
“What’s our churn?” sounds simple until two teams publish different percentages for the same month. One used customers at month start; another netted new signups into the denominator. One annualized a monthly rate; another reported raw logo count. All used the word churn.
This guide walks through how to calculate churn rate for subscription SaaS — separately for customer (logo) churn and revenue (MRR) churn. For what those metrics mean and when they diverge, start with revenue churn vs customer churn.
Last updated October 13, 2026
Pick customer churn or revenue churn first
- Customer churn rate — account exits ÷ customers at period start
- Gross MRR churn rate — lost MRR ÷ MRR at period start
- Do not mix numerators and denominators across the two
Customer churn rate — step by step
- Count only paying customers in your chosen population (often exclude trials unless labeled)
- Define “lost” consistently — canceled, churned, or non-renewed per your contract rules
- Express as a decimal or percentage; label the period (monthly vs quarterly)
Customer churn rate = Customers lost in period ÷ Customers at start of periodLogo churn is not the same as “users who stopped logging in.” Billing or subscription status is the usual source of truth.
Gross MRR churn rate — step by step
Use the same period boundary as customer churn when comparing both views. Expansion from upgrades is excluded here — that belongs in gross vs net revenue churn and net revenue retention (NRR).
Lost MRR = Sum of recurring revenue from subscriptions that ended in the period
Gross MRR churn rate = Lost MRR ÷ MRR at start of periodMonthly rate vs annualized churn
Boards often ask for “annual churn.” Teams sometimes multiply a monthly rate by twelve (linear) or compound it (1 − (1 − monthly)^12). Either can be valid if labeled — they are not interchangeable. Pick one convention and document it in your metrics glossary.
Common calculation mistakes
| Mistake | Why it breaks comparisons |
|---|---|
| New customers in the denominator | Acquisition masks retention; use start-of-period base |
| Blending voluntary and failed-payment exits | Hides fixable payment issues vs product issues — see voluntary vs involuntary guide |
| Counting downgrades as full churn | Downgrades are contraction; full churn is logo loss or zero MRR |
| Comparing logo % to MRR % directly | Different units — compare trends, not single blended “health score” |
Segment before you panic
Company-wide churn rate is a headline. Product decisions usually need plan, tenure, or ACV segments. Cancel-flow exports add reason and offer context — see customer churn analysis.
Rank cancel reasons by lost MRR
After you calculate company churn, use ChurnIntel to see which voluntary cancel reasons drive the most revenue loss in your flow.