What is Customer Churn? Definition, Formula & Examples (2026)
Customer churn is the rate at which customers stop paying for a subscription service over a given period. It can be measured by accounts lost (logo churn) or by revenue lost (revenue churn) — and they don't always move together.
The four churn formulas you actually need
1. Monthly logo churn
Logo churn = (cancelled accounts in month) ÷ (accounts at month start) × 100
Example: 100 accounts at January 1, 5 cancellations during January → 5% monthly logo churn.
2. Gross revenue churn (GRR loss)
Gross revenue churn = (MRR lost in period) ÷ (MRR at period start) × 100
Cancellations and downgrades only — does not subtract expansion. This is the cleanest measure of pure retention.
3. Net revenue churn
Net revenue churn = (MRR lost − MRR expansion) ÷ (MRR at period start) × 100
Can be negative — meaning expansion outpaces churn — the hallmark of a healthy B2B SaaS.
4. Dollar churn vs. customer churn
Dollar churn and revenue churn are the same metric, different name. Customer churn usually refers to logo churn unless the context makes "revenue" explicit. When in doubt, ask which one the speaker means — confusion here is the most common source of misaligned retention dashboards.
Worked example: Acme SaaS
Acme starts January with 200 customers and €100,000 MRR. During the month: 8 customers cancel (worth €3,200 combined), 2 customers downgrade (€800 lost), and 5 existing customers expand their plans (€4,500 added). What are Acme's churn metrics?
| Metric | Calculation | Result |
|---|---|---|
| Logo churn | 8 ÷ 200 × 100 | 4.0% |
| Gross revenue churn | (3,200 + 800) ÷ 100,000 × 100 | 4.0% |
| Net revenue churn | (4,000 − 4,500) ÷ 100,000 × 100 | −0.5% |
Acme is losing 4% of customers and 4% of recurring revenue each month — but expansion is more than covering the gap. Net negative churn at this scale is rare and worth investigating: if it holds for 3–6 months, Acme has product-market fit on expansion, not just acquisition.
2026 SaaS churn benchmarks
Directional benchmarks for B2B SaaS in 2026 (sources: KeyBanc SaaS Survey, ChartMogul, SaaS Capital):
| Segment | Median monthly logo churn | Top quartile |
|---|---|---|
| B2B SaaS, 5–50 employees | 6.2% | 2.8% |
| Mid-market B2B | ~1.0% | <0.6% |
| Enterprise B2B | <0.5% | <0.3% |
For deeper segmentation by ARR stage and vertical, see our 2026 SaaS churn rate benchmarks.
Voluntary vs. involuntary churn
Two distinct churn types — measured the same way, fixed completely differently:
- Voluntary churn: the customer chose to leave (value mismatch, switched competitors, used case ended). Reduced by product improvement, success motions, and ICP refinement.
- Involuntary churn: the customer wanted to stay but a payment failed (expired card, NSF, fraud block). Reduced by dunning automation and card-updater APIs. See our involuntary churn playbook.
20–40% of all SaaS churn is involuntary, and 60–80% of that is recoverable with disciplined dunning. Most teams under-invest here — see the complete dunning playbook.
Frequently asked questions
What is customer churn?
Customer churn is the rate at which customers cancel, downgrade, or stop paying for a subscription service over a given period (usually monthly or annually). It can be measured in two main ways: logo churn (the count of accounts lost) and revenue churn (the value of recurring revenue lost). Both matter — logo churn measures account loyalty, revenue churn measures the financial impact.
What's a good monthly churn rate for B2B SaaS?
For B2B SaaS in 2026, the median monthly logo churn at 5–50 employees is around 6.2%, with the top quartile at 2.8%. Healthy mid-market SaaS sits below 1% monthly logo churn; enterprise B2B below 0.5%. Anything above 8–10% monthly is usually a product or ICP-fit problem, not a retention problem.
What's the difference between logo churn and revenue churn?
Logo churn counts accounts: if 5 of 100 customers cancel in a month, logo churn is 5%. Revenue churn counts dollars: if those 5 accounts represented €2,000 of €100,000 MRR, revenue churn is 2%. They diverge when small accounts churn faster than large ones (low revenue churn, high logo churn) or vice versa.
What's the difference between gross and net revenue churn?
Gross revenue churn counts only the revenue lost from cancellations and downgrades. Net revenue churn subtracts expansion revenue (upsells, cross-sells) from that loss. Net churn can be negative — meaning expansion outpaces churn — which is the hallmark of a healthy B2B SaaS.
Should I calculate churn monthly or annually?
For monthly-billed SaaS, calculate monthly churn and annualize. For annual contracts, calculate annual churn directly — monthly numbers will be misleading because most cancellations cluster around renewal dates. Mixed contract types: report both, and segment by contract length.