Revenue & Retention

Revenue Churn

Revenue churn measures the percentage of recurring revenue lost from existing customers due to cancellations and downgrades.

Key Takeaways
  • Revenue churn (or MRR churn) is the percentage of recurring revenue lost in a period from customer cancellations and plan downgrades.
  • Common Mistakes:
  • Confusing revenue churn with customer churn (10 lost customers ≠ 10% revenue loss).
  • Including expansion revenue when calculating churn (that's NRR territory).
  • Not separating voluntary churn from involuntary churn (failed payments).
  • Using different time periods for starting MRR and churn calculations.
  • Ignoring partial-month effects when customers cancel mid-period.
  • Not tracking contraction separately from full churn.

Definition

Revenue churn (or MRR churn) is the percentage of recurring revenue lost in a period from customer cancellations and plan downgrades.

Low revenue churn (< 5%)

Strong retention and customer satisfaction.

Moderate churn (5-10%)

Typical for many SaaS businesses.

High churn (> 10%)

Significant revenue leakage; retention crisis.

Formula

Revenue Churn (%) = (Churned MRR + Contraction MRR) / Starting MRR × 100

Variables

Churned MRR

Revenue lost from customers who canceled.

Contraction MRR

Revenue lost from downgrades.

Starting MRR

Total MRR at the start of the period.

Examples

Monthly revenue churn

MetricAmount
Starting MRR$100,000
Churned MRR$5,000
Contraction MRR$2,000
Expansion MRR$8,000
  1. 1Revenue lost = $5,000 + $2,000 = $7,000
  2. 2Revenue churn = $7,000 / $100,000 × 100 = 7%
  3. 3(Note: Expansion is excluded from revenue churn)
→ Revenue churn = 7%

Track in Daymark

Data Sources

CSVgoogle sheetspostgreSQL

Required Fields

MRR movements by customer
  • customer_id
  • period
  • mrr_start
  • mrr_end
  • churn_date

Sample Questions

  • What is the monthly revenue churn rate?
  • Show revenue churn trend over the past year
  • Break down churn vs contraction MRR each month
  • Calculate revenue churn by customer segment
  • Compare revenue churn to customer churn rate
  • What percentage of revenue churn is recoverable?
Analyze revenue churn

Dashboard Template

1. line
Revenue churn rate

Churn percentage over time

2. stacked bar
Churn vs contraction

Revenue lost by type

3. pie
Churn by reason

Why revenue is lost

4. table
High-risk accounts

Customers likely to churn

Common Mistakes

  • •Confusing revenue churn with customer churn (10 lost customers ≠ 10% revenue loss).
  • •Including expansion revenue when calculating churn (that's NRR territory).
  • •Not separating voluntary churn from involuntary churn (failed payments).
  • •Using different time periods for starting MRR and churn calculations.
  • •Ignoring partial-month effects when customers cancel mid-period.
  • •Not tracking contraction separately from full churn.

FAQ

Q: Can revenue churn be negative?

When calculated without expansion, revenue churn should always be positive. Negative values mean you're including expansion (that's NRR).

Q: What's the relationship between GRR and revenue churn?

GRR = 100% − revenue churn rate. If revenue churn is 5%, GRR is 95%.

Q: Should I track gross or net revenue churn?

Track both. Gross revenue churn excludes expansion; net revenue churn includes it (which can be negative).

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