Calculate monthly churn rate, annual churn rate, revenue churn (MRR churn), and customer lifetime value (CLV). See the real dollar impact of losing customers and how reducing churn by 1% affects ARR.
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Gross churn rate = customers lost / customers at start. It measures raw attrition with no offset for new sign-ups. Net churn rate = (lost − new) / start — a negative value means you're growing faster than you're churning (expansion MRR). Customer Lifetime Value is calculated as CLV = ARPU / monthly_churn_rate assuming a constant churn rate. For quarterly inputs, the monthly equivalent is divided by 3 for CLV.
Gross churn measures customers lost as a percentage of your starting base — it ignores new customers. Net churn subtracts new acquisitions, so if you acquire more customers than you lose in a period your net churn is negative (a good thing). Investors and boards typically want to see both numbers.
CLV sets the ceiling on how much you can profitably spend to acquire a customer (CAC). A common healthy ratio is CLV:CAC ≥ 3:1. If your CLV is $300 and you're paying $250 to acquire a customer, your payback period is dangerously long.
For SMB SaaS, 1–2% monthly churn (≈12–22% annual) is considered acceptable. Enterprise SaaS should target below 1% monthly. Exceptional B2B products achieve negative net churn through expansion revenue — existing customers upgrading faster than others cancel.
The highest-ROI interventions are usually: onboarding improvements (activate users faster), proactive success check-ins for at-risk accounts, annual plan discounts (customers who pre-pay churn 3–4× less than monthly subscribers), and features that increase switching cost (integrations, data network effects).