What is churn rate? Logo churn vs revenue churn
Churn rate is the share of customers or recurring revenue a SaaS company loses over a period. Logo churn counts customers who cancel, divided by customers at the start of the period. Revenue churn counts recurring revenue lost to cancellations and downgrades, divided by starting recurring revenue. The two can tell very different stories.
Churn formulas
Customers who sign up during the period stay out of both the numerator and the denominator. Net revenue churn can be negative, which is the same thing as net revenue retention above 100%.
Worked example: when logo and revenue churn disagree
A fictional SaaS starts the month with 100 customers and €20,000 MRR.
- Month A: three small customers worth €100 each cancel, and one customer downgrades by €150. Logo churn 3%; gross revenue churn (€300 + €150) ÷ €20,000 = 2.25%.
- Month B: one large customer worth €1,000 cancels. Logo churn 1%; gross revenue churn 5%.
Month B looks better on logos and is twice as bad on revenue. Track both.
Monthly and annual rates don't convert by multiplying by 12: 2% monthly churn compounds to about 21.5% a year (1 − 0.98¹²).
Benchmarks
Lighter Capital's 2025 benchmarks of 155 private B2B SaaS startups put median annual revenue churn at 12.5% and median annual customer churn at 16.25%.1 SaaS Capital reports retention rather than churn: a median gross revenue retention of around 90% for companies with ACV under $25,000, which is roughly 10% annual revenue lost.2
Why it matters from €0 to €1M ARR, and how to diagnose it
Lincoln Murphy separates four causes, each with a different fix: bad-fit customers (wrong at the point of sale — tighten the ICP), expectation mismatch (sales promised more than the product does), adoption failure (they never activated) and value gap (they used it but couldn't justify the cost). When customers say "price", it's usually a proxy for not getting enough value.
- Under 10 customers: every churned customer is an interview, not a percentage.
- Around €10k MRR: track logo and revenue churn monthly, and read cohort curves — Casey Winters' test is whether they flatten.
- €50k+ MRR: churn caps growth. Acquisition scales whatever retention you already have.
Common churn mistakes
- Including new customers in the denominator. It dilutes churn in fast-growing months.
- Reading annual contracts monthly. Annual customers can only churn at renewal, so eleven months of zero churn mean little.
- Taking "too expensive" at face value.
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What is the difference between logo churn and revenue churn?
What is a good churn rate for B2B SaaS?
What is negative churn?
Who wrote this
Madalena Rugeroni built Mazo. She's an ex-Googler, a startup advisor and investor, and runs a portfolio of internet companies. Before that, as Head of Growth at Amplemarket, she scaled a B2B SaaS to $10M ARR. LinkedIn
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- Median annual revenue churn 12.5% and customer churn 16.25%: Lighter Capital, "2025 B2B SaaS Startup Benchmarks"
- Median gross revenue retention of about 90% for ACV under $25,000: SaaS Capital, "2023 B2B SaaS Retention Benchmarks" (PDF)
Operators and books referenced: Lincoln Murphy (customer success), Casey Winters (retention curves). These are published methodologies credited to their authors; Mazo is not affiliated with or endorsed by them.