Churn Rate

Churn rate measures the rate at which a subscription business loses customers or revenue. It is calculated as the number of customers lost (or revenue lost) during a period, divided by the number of customers (or revenue) at the start of that period, expressed as a percentage. A business with 1,000 customers at the start of the month that loses 30 has a 3% monthly customer churn rate.

There are several ways to calculate and express churn, and the differences matter. Customer churn counts the number of subscribers who leave. Revenue churn measures the dollar value lost. Logo churn is another term for customer churn. Gross revenue churn counts only losses, while net revenue churn offsets losses with expansion revenue from remaining customers. A business can have negative net revenue churn if expansion exceeds losses — a powerful indicator of health.

Churn is divided into two fundamental types: voluntary and involuntary. Voluntary churn occurs when customers actively choose to cancel — they no longer need the product, found an alternative, or cannot justify the cost. Involuntary churn occurs when subscriptions end due to payment failures that are not resolved. Industry research suggests that involuntary churn accounts for 20-40% of total churn for most subscription businesses.

Acceptable churn rates vary by market segment. Enterprise SaaS businesses typically target less than 5% annual logo churn (under 0.5% monthly). SMB SaaS companies commonly see 3-7% monthly churn. Consumer subscriptions can run as high as 8-12% monthly. Regardless of segment, any reduction in churn has an outsized impact on long-term revenue because of the compounding effect.

LostChurn specifically targets involuntary churn — the portion caused by failed payments. By recovering payments that would otherwise be lost, the platform directly reduces your overall churn rate without requiring changes to your product, pricing, or customer success operations.