Revenue Metrics

Churn: Customer or Revenue Churn Rate

The percentage of customers (logo churn) or revenue (revenue churn) lost in a period.

Definition

Churn rate measures the percentage of customers (logo churn) or recurring revenue (revenue churn) lost in a defined period. Logo churn counts cancellations; revenue churn weights cancellations by their MRR. Both should be measured.

Formula

Customer Churn = Customers Lost in Period ÷ Customers at Start of Period × 100

Churn = Lost in Period / Start of Period × 100%

Worked example

Start the month with 200 customers; 10 cancel. Monthly logo churn is 5% (annualised ~46% if compounded). If those 10 customers represented £5,000 of £100,000 MRR, monthly revenue churn is also 5%.

Why it matters

Churn is the silent killer. A 5% monthly churn rate means the business loses roughly half its customers every year. You cannot outrun high churn with new sales. Most leaders find that a 10-point reduction in churn is more valuable than a 10-point lift in new business.

Common mistakes

  • Reporting only logo churn when revenue churn diverges materially
  • Annualising monthly churn naively (5% monthly is closer to 46% annual, not 60%)
  • Excluding involuntary churn (failed cards, expired contracts) from the headline number

Related terms

NRRGRRLTVMRR

Read more in The Guide

Chapter: Metrics That Matter →

Sources & further reading

  • — Drawn from Evara's working definitions used on retained search and revenue advisory engagements (2024–2026).
  • — Reconciled against industry conventions in SaaStr, OpenView SaaS Benchmarks and Bessemer State of the Cloud.
  • — Reviewed by Rich Evans, Strategic Advisor at Evara and former operator/founder.

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