The basic formula:
Churn rate = (customers lost during the period / customers at the start of the period) × 100
Example: an SaaS SME starts the month with 200 customers and loses 6 → monthly churn = 6 / 200 = 3%.
Always specify the period. A churn rate of “3%” means nothing without knowing if it is monthly or annual. A 3% monthly churn corresponds, compounded, to a loss of around 30% of customers over a year – far heavier than it appears.
Customer churn vs revenue churn (MRR). There are two types:
Revenue churn is often more relevant: losing 3 small customers does not weigh as much as losing 1 large one. Some companies even achieve negative revenue churn (net negative churn) when expansion – upsells and cross-sells – among remaining customers exceeds lost revenue.
These calculations are rough estimates: depending on the model, refinements can be made (cohorts, gross vs net churn), but the logic remains the same.
Churn acts like a leak in the bucket: as long as it is high, every new customer acquired first serves to offset departures before adding net growth.
MRR mechanism: each month, recurring revenue changes according to
Ending MRR = Starting MRR + new + expansion − contraction − churn.
If churn absorbs most new customers, MRR stagnates despite costly acquisition efforts.
This is why, beyond a certain customer volume, reducing churn becomes more profitable than acquiring more customers: retaining an existing customer generally costs far less than winning a new one.
Concrete levers for an SME:
Controlled churn extends customer lifetime, mechanically increases customer lifetime value and frees up acquisition for net growth rather than damage control.
Discover the Orizen answer: Orizen subscription management, modular and built for French SMEs.
Essai gratuit 14 jours What the Orizen subscription management module costsChurn rate = (customers lost during the period / customers at the start of the period) × 100. For example, 6 customers lost out of 200 at the start of the month results in a monthly churn of 3%. Always specify the period (monthly or annual) and distinguish between customer churn and revenue churn (lost MRR), which is often more meaningful as it accounts for customer size.
Customer churn counts the number of customers lost; revenue churn measures lost MRR (cancellations and plan downgrades). The latter is often more relevant because losing three small customers does not have the same impact as losing one large customer. When expansion (upsell, cross-sell) from remaining customers exceeds losses, it is even called negative revenue churn, a sign of a very healthy model.
Because it directly impacts recurring revenue: each month, churn is subtracted from MRR. High churn means new customers first fill the gaps left by departures before adding net growth. Beyond a certain scale, reducing churn often costs less than acquiring more customers, while extending customer lifetime and increasing customer lifetime value.