What is churn rate and what counts as good?
Churn rate is the share of customers or revenue lost in a period. Below roughly 1% monthly is strong for B2B SaaS; consumer subscription churn is routinely 5-8%. But the headline number matters far less than its shape — churn concentrated in month one is an onboarding problem, not a retention one.
Calculating it
Customers lost during a period divided by customers at the start of that period. Simple, and easy to accidentally flatter: exclude trials, exclude involuntary churn from expired cards, and pick a long enough window and almost any number can be made presentable.
Report voluntary and involuntary churn separately. Failed payments are a billing problem with a technical fix; cancellations are a product problem.
What "good" means depends entirely on the model
For B2B SaaS with annual contracts, monthly logo churn under 1% is healthy. For consumer subscriptions, 5-8% monthly is normal and the entire business is built around it — which is why consumer subscription companies spend so heavily on acquisition. A number that would be an emergency in one model is the operating assumption in the other.
The shape matters more than the number
Segment churn by tenure. Heavy churn in the first 30 days means users never reached value — that's an activation problem, and no win-back campaign will fix it. Churn that's flat across tenure means the product's value genuinely expires for a segment. Churn that rises at month 12 usually means an annual renewal decision, not a product decision.
Peloton is the cautionary case. Churn stayed low through the pandemic, when a locked-down customer base had no alternatives, and the company read a temporary market condition as a durable product truth — building supply chain, staffing and forecasts on it. Cult.fit ran into a version of the same problem in its super-app phase, where breadth diluted the core habit that kept people renewing.
A churn rate is a lagging indicator of a decision you made months earlier. By the time it moves, the thing that caused it is already shipped.
Seen in practice
Case studies where this shows up as a real decision, not a definition.
Related questions
What is negative churn?
Negative net revenue churn happens when expansion revenue from existing customers exceeds the revenue lost to cancellations and downgrades. The customer base shrinks in count but grows in value, which is why it's a strong signal in B2B — it means growth continues even if you stop acquiring.
What is the difference between customer churn and revenue churn?
Customer churn counts accounts lost; revenue churn counts money lost. They diverge sharply when customer sizes vary — losing forty small accounts and one enterprise account produce very different revenue outcomes from the same customer churn number.
Why does churn spike after a pricing change?
Because a price change forces every customer to re-evaluate, including ones who would otherwise have renewed passively. The spike is usually one-off; the number to watch is whether the post-change baseline settles higher than the old one.
More on metrics
Last reviewed 2026-09-07