SaaS Churn Rate: Revenue vs Logo Churn
Churn is the silent killer of SaaS growth. Understanding the difference between logo churn and revenue churn, and how gross and net retention relate to each other, is foundational for managing a healthy SaaS business.
Logo Churn vs Revenue Churn
Logo (Customer) Churn
The percentage of customers who cancel in a given period.
Logo Churn = Churned Customers / Starting Customers
Logo churn treats all customers equally regardless of size. Losing your largest customer counts the same as losing your smallest.
Revenue (MRR) Churn
The percentage of MRR lost from cancellations and downgrades.
MRR Churn = (Churned MRR + Contraction MRR) / Starting MRR
Revenue churn is weighted by contract size. Losing one $10K/mo customer is 10x worse than losing ten $100/mo customers by this metric.
Why they diverge
A company with 100 customers, 10 of which represent 50% of revenue, could show 10% logo churn and 5% revenue churn if only small customers left. Conversely, losing one large customer could show 1% logo churn but 8% revenue churn. Both numbers together give the full picture. Track both every month.
Gross vs Net Revenue Retention
Gross Revenue Retention (GRR)
GRR measures how much of your starting revenue you keep, excluding any expansion. It can never exceed 100%. It shows your pure retention ability.
GRR = (Starting MRR - Churned MRR - Contraction MRR) / Starting MRR
GRR above 95%: excellent
GRR 90-95%: good
GRR below 85%: needs urgent attention
Net Revenue Retention (NRR)
NRR includes expansion revenue from upgrades and cross-sells. Can exceed 100%, which is the goal. It measures the total health of the customer base.
NRR = (Starting MRR - Churned + Expansion) / Starting MRR
NRR above 120%: best-in-class
NRR 100-120%: healthy expansion
NRR below 100%: churn exceeds expansion
Churn Benchmarks by Customer Segment
| Customer Segment | Monthly Churn | Annual Churn | Target GRR |
|---|---|---|---|
| SMB (under $1K/mo) | 3-7% | 30-60% | 70-85% |
| Mid-market ($1K-$10K/mo) | 1-3% | 12-30% | 85-93% |
| Enterprise ($10K+/mo) | 0.3-1% | 3-12% | 93-98% |
| Vertical SaaS | 0.5-2% | 6-20% | 88-95% |
| Developer tools / PLG | 2-5% | 22-45% | 75-88% |
SMB churn is naturally higher due to smaller budgets and less switching cost. Enterprise deals are stickier due to procurement cycles, integrations, and higher switching cost. Use segment-appropriate benchmarks.