Churn rate

What is Churn rate?

Churn rate is the customer attrition rate — the percentage of customers (or revenue) a company lost during a given period. In its simplest form it is calculated as: (number of customers lost in the month / number of customers at the start of the month) × 100. In SaaS a distinction is made between customer churn (people who left) and revenue churn (MRR lost), with revenue churn being more telling — losing one large customer hurts more than losing ten small ones.

In B2B SaaS, a healthy monthly churn is below 2%; in smaller businesses and service-based B2B it may be higher. What counts as “good” depends on the segment — high churn is expected for a freemium tool, but would be catastrophic for an enterprise contract.

When it is used

Churn is tracked primarily in:

• SaaS and subscription models (streaming, cloud, software)
• Telecoms and utilities
• Service-based B2B contracts with periodic billing
• Membership and community models

The inverse of churn rate is retention rate. Both metrics are the basis for calculating CLV and LTV.

See the CRM module and the Contracts module.

Related terms

• CLV — churn appears as a divisor in the CLV formula. See /en/glossary/clv.
• LTV — an alternative term for CLV. See /en/glossary/ltv.
• SaaS — the model in which churn is a key metric. See /en/glossary/saas.

In Modulario

The CRM module in Modulario automatically tracks the status of customer contracts and records churn upon expiration or termination. Dashboards display monthly, quarterly, and annual churn rate broken down by product, segment or sales representative — ideal for early identification of attrition risk.

Churn analysis in Modulario can be enriched with custom attributes (e.g. industry, company size, pricing tier), and the system displays churn by segment — typically revealing that small customers churn several times more than enterprise accounts. Automatic alerts notify the customer success team when a customer shows signs of impending churn (declining activity, negative NPS).

In B2B practice the term net negative churn is also used — the state in which existing customers buy more through upgrades and expansions than the company loses through attrition. Achieving net negative churn is the goal for a healthy SaaS business — the company grows even without acquiring new customers.