SaaS Churn Rate Impact
The "silent killer" of SaaS growth. See how much revenue you are losing.
How This Tool Works
Churn is when customers cancel their subscription. This calculator visualizes the "Leaky Bucket" effect. It shows you exactly how much future revenue you are losing due to your current churn rate compared to a target improved rate.
- Evaluation: It compounds your growth and churn rates over the specified time period.
- The Insight: Reducing churn by just 1% often has a higher ROI than increasing sales by 10%.
How to Use
- Current MRR: Your Monthly Recurring Revenue today.
- New Growth Rate: Percentage of revenue you add from new sales each month.
- Current vs Target Churn: Compare your current reality (e.g., 5%) with a realistic goal (e.g., 4%).
The Power of 1%
MRR: $10,000. Growth: 5%. Duration: 3
Years.
• At 5% Churn: Ending MRR = $10,000 (Growth is cancelled out).
• At 4% Churn: Ending MRR = $14,300.
• Difference: +$4,300/mo just by saving 1% of
users.
Why Retention Wins
Acquiring a new customer is 5x-25x more expensive than retaining an existing one. High churn makes LTV (Lifetime Value) plummet, making it impossible to afford paid ads.
Limitations & Disclaimer
• This model assumes constant growth and churn rates, which rarely happens linearly.
• It does not account for "Expansion Revenue" (upsells), which can lead to Net Negative
Churn.
FAQs
Because it compounds. A 5% monthly churn means you lose ~46% of your customers every year. You have to run twice as fast just to stay in the same place.
For SMB SaaS, 3-5% monthly churn is average. For Enterprise SaaS, it should be under 1% monthly (or negative net churn).
Improve onboarding, fix bugs, offer annual plans (annual contracts churn less), and talk to cancelling users to understand why they leave.