Glossary · Metrics · Updated
Churn is the share of customers or revenue lost over a given period. Measured in customers it is called logo churn; measured in euros it is revenue churn. The gap between the two often says more than either figure alone.
Churn decides whether a company is building something durable or filling a leaking bucket. It drives LTV, therefore model profitability, therefore how much you can spend on acquisition. It is also the first number investors ask for when growth looks good, because that is where the bad surprises hide.
Comparing logo churn with revenue churn reveals which customers are leaving. If logo churn exceeds revenue churn, small accounts are going, which is annoying but manageable. If the reverse is true, you are losing your large customers, and the problem is far more serious.
Annualisation holds surprises. Three percent monthly churn sounds modest but means more than 30% of customers lost over a year. Plenty of teams quote the monthly figure precisely because it flatters, and investors always run the calculation.
Example: logo churn, revenue churn and annualisation
A B2B SaaS measures attrition over a reference month.
| Customers at start of month | 200 |
|---|---|
| Customers lost during the month | 6 |
| Monthly logo churn | 6 / 200 = 3% |
| MRR at start of month | €100,000 |
| MRR lost during the month | €2,000 |
| Monthly revenue churn | 2% |
| Annualised logo churn | 1 − 0.97¹² = 30.6% |
| Average revenue of lost customers | €2,000 / 6 ≈ €333 |
| Average revenue across the base | €100,000 / 200 = €500 |
Departing customers bill €333 on average against €500 across the base: it is the small accounts leaving. The problem is real but contained, and probably a targeting issue rather than a product one.
The common mistake
Quoting monthly churn without annualising it. Three percent a month is easy to say in a meeting but means roughly a third of the base lost over a year. The investor will do the maths, so you may as well present it yourself.
Frequently asked questions
What is the difference between logo churn and revenue churn?+
Logo churn counts customers lost, revenue churn counts euros lost. If logo churn is higher, you are mainly losing small accounts. If revenue churn is higher, you are losing your big ones, which is considerably more worrying.
What level of churn is acceptable?+
In B2B SaaS on annual contracts, logo churn under 1% per month is good and above 3% per month undermines LTV. In B2C or on rolling monthly subscriptions, acceptable levels are appreciably higher.
Related terms
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