Quick answer
Compare revenue churn and customer churn for SaaS, with formulas, examples and guidance for account-size differences.
Core formulas
Customer churn = canceled customers / starting customers
This measures account loss, not revenue loss.Revenue churn = churned MRR / starting MRR
This measures recurring revenue lost from canceled accounts.Gross revenue churn = (churned MRR + contraction MRR) / starting MRR
Include contraction when downgrades are material.Worked example
Different churn stories
- A SaaS business starts with 500 customers and $40,000 MRR.
- 20 customers cancel during the month.
- Those canceled customers represented $2,800 MRR.
Why the two metrics diverge
Customer churn treats every account equally. Revenue churn weights churn by recurring revenue. When customers pay different amounts, a small number of large customer losses can hurt more than a larger number of small customer losses.
That is why SaaS teams often track both. Customer churn shows logo retention. Revenue churn shows financial retention.
How to read the pattern
If customer churn is higher than revenue churn, smaller customers may be leaving more often. If revenue churn is higher than customer churn, larger accounts may be at risk. Each pattern points to a different product, onboarding or customer success problem.
- High customer churn, low revenue churn: many small accounts leave.
- Low customer churn, high revenue churn: fewer but larger accounts leave.
- Both high: retention needs attention before aggressive acquisition.
Where contraction fits
Downgrades are not full churn, but they still reduce recurring revenue. Track contraction separately when customers stay but pay less. This keeps churn analysis from hiding plan downgrades.
Use the calculators
FAQ
Which churn metric should I optimize first?
Use customer churn to understand account loss and revenue churn to understand financial loss. If plan sizes vary, revenue churn is usually more important for forecasting.
Does revenue churn include expansion?
Gross revenue churn excludes expansion. Net revenue churn subtracts expansion from lost recurring revenue.
Should downgrades count as churn?
Track downgrades as contraction MRR. They are not customer churn, but they are revenue loss.