Revenue Churn Calculator Formula
Understand the math behind the revenue churn calculator. Each variable explained with a worked example.
Formulas Used
Gross Revenue Churn Rate
gross_revenue_churn = starting_mrr > 0 ? ((churned_mrr + contraction_mrr) / starting_mrr) * 100 : 0Total MRR Lost
total_lost = churned_mrr + contraction_mrrAnnualized Revenue Loss
annualized_loss = (churned_mrr + contraction_mrr) * 12Variables
| Variable | Description | Default |
|---|---|---|
churned_mrr | Churned MRR (lost from cancellations)(USD) | 12000 |
contraction_mrr | Contraction MRR (lost from downgrades)(USD) | 3000 |
starting_mrr | Starting MRR(USD) | 300000 |
How It Works
How to Calculate Revenue Churn
Formula
Gross Revenue Churn = (Churned MRR + Contraction MRR) / Starting MRR x 100
Revenue churn captures all recurring revenue losses in dollar terms, combining full cancellations with downgrades. It weights each lost customer by their spending, so losing one $5,000/month enterprise account matters more than losing five $50/month accounts. This is the metric investors scrutinize most.
Worked Example
A company starts with $300,000 MRR, loses $12,000 from cancellations and $3,000 from downgrades.
- 01Total MRR Lost = $12,000 + $3,000 = $15,000
- 02Gross Revenue Churn = ($15,000 / $300,000) x 100 = 5%
- 03Annualized Loss = $15,000 x 12 = $180,000
Frequently Asked Questions
What is the difference between gross and net revenue churn?
Gross revenue churn only counts losses (cancellations + downgrades). Net revenue churn subtracts expansion revenue from those losses. Net revenue churn can be negative if expansion exceeds losses, which is the gold standard for SaaS.
What revenue churn rate should I target?
For B2B SaaS, aim for gross monthly revenue churn below 2%. Below 1% is excellent. High-performing companies achieve net negative churn, meaning their existing customer base grows even without new sales.
Ready to run the numbers?
Open Revenue Churn Calculator