<p>Most SaaS founders know their churn rate matters. Surprisingly few know how to calculate it correctly. And even fewer are using the right formula for their stage of business.</p>
<p>This guide covers the three churn rate formulas that actually matter, how to pull the numbers from Stripe, and which benchmarks to aim for based on your revenue.</p>
<h2>The basic formula (start here)</h2>
<p>Monthly churn rate = (Customers lost in a month / Customers at the start of the month) x 100</p>
<p>Simple. If you started January with 200 subscribers and lost 8 by January 31st, your churn rate is (8 / 200) x 100 = 4%.</p>
<p>This is the formula most people use. It works fine when you're small and your customer base doesn't change much month to month. But it breaks down fast once you start growing.</p>
<h2>The revenue churn formula (what actually matters)</h2>
<p>Customer count is nice. Revenue is what pays bills. Revenue churn tells you how much MRR you're losing as a percentage:</p>
<p>Revenue churn rate = (MRR lost to cancellations and downgrades in a month / MRR at the start of the month) x 100</p>
<p>Why this matters: losing 3 customers on your £9/mo plan and gaining 1 customer on your £99/mo plan is net negative for customer count but net positive for revenue. Revenue churn tells the real story.</p>
<h2>Pulling the numbers from Stripe</h2>
<p>Open your Stripe dashboard. Go to the Subscriptions section. Filter by status: cancelled. Set the date range to last month.</p>
<p>Count the cancellations. Now go to your MRR overview (or Balances if you're on the new dashboard) and note your MRR at the start of that month and the MRR lost to cancellations.</p>
<p>If you want to be precise about downgrades (which count as partial churn), Stripe's Revenue Recognition reports break out downgrade revenue loss separately. Most founders skip this at first — cancellations alone give you 80% of the picture.</p>
<h2>The gross vs net distinction</h2>
<p>Gross churn = revenue lost from cancellations and downgrades only. Net churn = gross churn minus expansion revenue (upgrades, plan increases).</p>
<p>Net churn can go negative, which means you're growing faster than you're losing. That's the dream. A SaaS at £20K MRR with 5% gross churn but 8% expansion from upgrades has -3% net churn — they're growing even while losing customers.</p>
<p>Most investor conversations and benchmarking use net churn. Your internal dashboard should show both.</p>
<h2>What's a good churn rate?</h2>
<p>For B2C SaaS: 3-7% monthly is typical. Below 3% is excellent. Above 7% means you have a retention problem, not a marketing problem.</p>
<p>For B2B SaaS: 1-3% monthly is typical. Below 1% is exceptional. Above 3% at the B2B level usually means your onboarding or product-market fit needs work.</p>
<p>For small SaaS (under £10K MRR): Don't panic if your churn looks high. At 100 customers, losing 5 is 5% churn. At 1,000 customers, losing 50 is the same rate but it hurts less because acquisition is compounding. Early-stage churn is volatile by nature.</p>
<h2>The calculation that changes everything</h2>
<p>Here's the number most founders never work out: the annual cost of their churn.</p>
<p>Take your monthly churn rate and your current MRR. Annual lost revenue = MRR x churn rate x 12. A business at £15,000 MRR with 5% monthly churn loses £15,000 x 0.05 x 12 = £9,000 per year. That's a junior hire. That's a real marketing budget. That's the difference between ramen profitability and actual profitability.</p>
<p>Now work out what recovering just 30% of that churn is worth: £2,700/year. With compounding, closer to £9,000 over three years. That's why churn recovery has the highest ROI of any growth lever — you're not acquiring new customers, you're keeping the ones you already paid to get.</p>
<h2>Automating the maths</h2>
<p>Calculating churn manually from Stripe is fine once a month. Acting on it in real time requires automation. SaveMyChurn connects to your Stripe, calculates these metrics continuously, and automatically reaches out to at-risk subscribers before they cancel — using AI to personalise the retention conversation based on each subscriber's context.</p>
<p>Instead of watching churn happen and calculating the damage after, you intervene while there's still time to save the subscription. The first £200 of recovered revenue is free, so you can see the impact before committing to anything.</p>