MRR Churn: Definition, Formula & 2026 SaaS Benchmarks
MRR churn is the percentage of monthly recurring revenue a SaaS business loses each month from cancellations and downgrades. It is the cleanest dollar-based measure of retention — and the metric most often confused with logo churn at board meetings.
Gross vs. net MRR churn — the formulas
Gross MRR churn
Gross MRR churn = (MRR lost in month) ÷ (MRR at month start) × 100
Gross MRR churn excludes expansion. It is the right number to track when you want to measure the underlying decay rate of your customer base.
Net MRR churn
Net MRR churn = (MRR lost − MRR expansion) ÷ (MRR at month start) × 100
Net MRR churn can be negative — meaning expansion outpaces churn — which is the hallmark of a healthy B2B SaaS. Most public SaaS companies with NRR > 110% report negative net MRR churn.
MRR churn vs. logo churn
Logo churn counts accounts; MRR churn counts dollars. They diverge whenever account size varies — losing five $50/month customers equals one $250/month customer in MRR but is 5× the logo churn. Most modern boards care more about MRR churn because it is the direct input to revenue growth, but logo churn remains the better early-warning signal for product-market fit.
2026 MRR churn benchmarks
| Segment | Median gross MRR churn | Top quartile |
|---|---|---|
| SMB B2B SaaS | 2.5% | <1.5% |
| Mid-market B2B | 1.0% | <0.7% |
| Enterprise B2B | 0.5% | <0.3% |
Sub-1% MRR churn is considered healthy mid-market; sub-0.5% is the enterprise bar. See our 2026 SaaS churn rate benchmarks for a deeper segmentation by ARR stage and vertical.
What drives MRR churn down
- Behavioral early-warning signals. Engagement drops, drop in core-feature usage, support sentiment shifts. See behavioral churn prediction.
- Dunning automation. 20–40% of MRR churn is involuntary (failed cards). Most of that is recoverable — see the dunning playbook.
- Annual contract conversion. Annual plans typically cut MRR churn by 30–50% versus monthly.
- ICP discipline. The largest churn lever is usually who you sell to, not how you save them.
Frequently asked questions
What is MRR churn?
MRR churn is the percentage of monthly recurring revenue a SaaS business loses in a given month through cancellations and downgrades. Gross MRR churn counts only the lost revenue; net MRR churn subtracts expansion revenue (upsells, cross-sells, seat adds) from that loss.
What is a good MRR churn rate in 2026?
Directional 2026 benchmarks: healthy SMB SaaS sits below 2% gross MRR churn per month, mid-market below 1%, and enterprise below 0.5%. Top-quartile enterprise hits sub-0.3% and frequently delivers negative net MRR churn driven by seat expansion.
What is the difference between MRR churn and logo churn?
Logo churn counts accounts lost; MRR churn counts revenue lost. They diverge whenever account size varies — losing five small accounts can equal one large account's MRR. Most boards care more about MRR churn because it is the direct input to revenue growth.
Why can net MRR churn be negative?
When expansion revenue from existing customers exceeds the MRR lost to cancellations and downgrades, net MRR churn is negative. This is the hallmark of product-led B2B SaaS and the single strongest signal a company can compound efficiently.