Churn Rate
The percentage of customers or revenue lost over a given period — a measure of how well a business retains its existing base.
The MRR waterfall explicitly shows churned revenue alongside new and expansion revenue.
What is Churn Rate?
Churn rate measures customer loss. If you start the month with 100 customers and lose 5, your monthly customer churn rate is 5%. Revenue churn works the same way but measures the dollar amount lost rather than the count of customers.
There's also "net revenue churn" which accounts for expansion revenue from existing customers. If you lost $5,000 in churned revenue but upsold $3,000 to remaining customers, your net revenue churn is $2,000.
Negative net revenue churn — where expansion exceeds churn — is the holy grail of SaaS businesses. It means your existing customer base generates more revenue over time even without acquiring new customers.
Why it matters
Churn is the silent runway killer. High churn means you're constantly running to replace lost revenue before you can grow. A 5% monthly churn rate means you lose roughly half your customers every year.
For runway planning, churn directly impacts your net burn calculation. If you're projecting revenue growth but ignoring churn, your actual runway will be shorter than projected.
Formula
Customer Churn Rate = (Customers Lost in Period / Customers at Start of Period) × 100 Revenue Churn Rate = (MRR Lost to Churn / MRR at Start of Period) × 100
Example
You start March with $50,000 MRR across 40 customers. During March, 3 customers cancel ($4,500 MRR) and 2 customers downgrade ($1,000 reduction). Revenue churn = $5,500 / $50,000 = 11%. Customer churn = 3 / 40 = 7.5%.
How RunwayCal helps
RunwayCal's revenue model accounts for churn in your MRR projections. The deal pipeline tracks active vs churned deals, and the MRR waterfall explicitly shows churned revenue alongside new and expansion revenue.
Common mistakes
- 1Measuring only customer count churn while ignoring revenue churn (losing a $10K customer matters more than losing a $100 customer)
- 2Not distinguishing between voluntary churn (cancellation) and involuntary churn (failed payments)
- 3Calculating churn on too short a period, which can be misleading for small customer bases
See how churn impacts your runway
RunwayCal's MRR waterfall shows exactly how churned revenue affects your net burn and runway projections.
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