What is Churn Rate?
Churn rate (or attrition rate) is the percentage of customers who stop doing business with an entity during a given period. It is the inverse of retention rate. While it is most commonly associated with subscription businesses (SaaS, streaming services, gyms), it applies to any business with repeat customers.
Logo Churn
The percentage of customer accounts lost. This metric tells you how many people are leaving, regardless of how much they pay.
Revenue Churn
The percentage of monthly recurring revenue (MRR) lost. This is often more critical for B2B SaaS, as losing one enterprise client hurts more than losing ten small ones.
2025 Churn Rate Benchmarks by Industry
"Good" churn is relative. A B2C streaming service will naturally have higher churn than an enterprise B2B platform with annual contracts. Here are the median monthly churn rates observed in early 2025:
| Industry / Model | Good Monthly Churn | Average Monthly Churn | Danger Zone |
|---|---|---|---|
| SaaS (Enterprise B2B) | < 0.5% | 0.5% – 1.0% | > 2.0% |
| SaaS (SMB B2B) | < 2.5% | 3.0% – 5.0% | > 7.0% |
| B2C Subscription (Media/Box) | < 5.0% | 6.0% – 8.0% | > 10.0% |
| Mobile Apps (Freemium) | < 10% | 15% – 20% | > 25% |
Strategies to Reduce Churn
Up to 40% of churn is due to failed payments (expired cards, fraud flags). Implement automated dunning emails and card updaters.
Most churn happens in the first 90 days. Ensure customers reach their "Aha!" moment within the first session.
Annual plans typically have 50-70% lower churn than monthly plans because the purchase decision is made only once a year.
The Math Behind the Calculator
Period Churn Rate:
Churn = Lost Customers / Starting Customers
Monthly Churn (from Quarterly/Annual):
Monthly = 1 - (1 - PeriodChurn)^(1/Months)
We use geometric compounding, not simple division, to account for the fact that customers leaving in month 1 are not there to leave in month 2.
Annualized Churn:
Annualized = 1 - (1 - MonthlyChurn)^12
Why Annualized Churn Looks Scary
A "small" monthly churn of 5% results in an annualized churn of 46%. This means you lose nearly half your customer base every year. This visualizes why small improvements in monthly retention compound into massive gains over time.