What is revenue churn rate?
Revenue churn rate, or gross revenue churn, is the share of recurring revenue you lose from existing customers over a period, before any expansion. It counts churned and downgraded revenue, so it is the dollar version of customer churn.
Revenue churn and logo churn can diverge. Lose a few small accounts and logo churn looks bad while revenue churn stays low. Lose one large account and the reverse is true. Revenue churn is the one that hits the model.
The revenue churn formula.
Revenue churn rate = churned MRR plus contraction MRR, divided by starting MRR, as a percentage. It is the exact complement of gross revenue retention: a 7% revenue churn is a 93% GRR.
This is gross revenue churn, so expansion is excluded. Net revenue churn would subtract expansion and can go negative when expansion outpaces losses.
A worked example.
You start with 100,000 dollars of MRR. You lose 5,000 to churn and 2,000 to downgrades. Revenue churn is 7,000 divided by 100,000, which is 7%. Your gross revenue retention is 93%.
What is a good revenue churn rate?
For B2B SaaS, monthly gross revenue churn under 1% is excellent, and the strongest companies sit near or below it. On an annual basis, under 10% is healthy. Above those levels, revenue is leaking from the base faster than expansion can comfortably refill.
Read it with net revenue retention. A company can post strong NRR above 100% while revenue churn quietly climbs, because expansion is masking the losses underneath.
How to reduce revenue churn.
Revenue churn falls when fewer customers cancel and fewer downgrade. The downgrade side often comes down to packaging and proving value at renewal; the cancellation side is onboarding and fit.
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