What Is a Good Churn Rate for SaaS?

What is churn rate?

Churn rate is the percentage of customers (or revenue) lost over a given period. For SaaS, it's typically measured monthly:

There are two common flavours: customer churn (logo churn) counts cancellations, while revenue churn (MRR churn) weights each loss by what that customer was paying. Revenue churn is more useful for most businesses, because losing a $500/mo customer hurts more than losing a $20/mo one.

Want to calculate yours right now? Use our free SaaS Churn Rate Calculator.

Churn benchmarks by company stage

The single biggest factor in what counts as "good" is how mature your business is. A seed-stage startup with 30 customers and a scaling B2B company with 3,000 are playing entirely different games.

• Pre-product-market fit (seed/early): Monthly churn of 5–15% is common and not necessarily a red flag. You're still figuring out what to build and for whom. If churn is below 5%, you're doing well. If it's above 15%, your product may not be solving a real problem yet.
• Early growth (Series A/B): Target 3–5% monthly. You've found fit but are refining onboarding, pricing, and support. High churn here is a sign you're scaling acquisition before fixing retention.
• Scaling (Series C+): Aim for 1.5–3%. At this stage, churn should be a well-understood metric with specific initiatives to reduce it.
• Mature SaaS: Best-in-class companies operate at 0.5–2% monthly. Some achieve net negative revenue churn through expansion revenue.

Churn benchmarks by vertical

Industry matters. B2B software with long contracts and deep integrations naturally retains better than consumer-facing products with low switching costs.

These are median figures from publicly available SaaS benchmarking data. Your mileage will vary. A developer tool selling to enterprises will behave differently from one selling to solo developers.

Churn benchmarks by price point

Higher-priced products generally churn less. This isn't just about the customers being "more committed". Higher price points usually correlate with deeper integrations, more onboarding support, and higher switching costs.

So what does "good" actually mean?

A "good" churn rate isn't a single number. It's a rate that:

1. Is trending downward. Even if it's currently high, consistent improvement matters more than the absolute number
2. Is understood. You know why customers leave, which segments churn most, and what the danger zones are
3. Is competitive for your segment. Use the benchmarks above to calibrate, but compare against your direct peers, not all of SaaS
4. Allows growth. If churn exceeds your growth rate, your business is shrinking. The Revenue Impact Calculator makes this relationship viscerally clear

A pre-PMF startup with 10% monthly churn that's learning fast and improving each cohort is in a healthier position than a Series C company with 3% churn and no idea why it's stable.

How to reduce your churn rate

There's no silver bullet, but the highest-leverage actions tend to fall into a few categories:

1. Fix onboarding

The majority of churn happens in the first 90 days. If customers don't reach their "aha moment" quickly, they leave. Audit your activation metrics: what percentage of sign-ups complete the key first action? Where do they drop off?

2. Identify at-risk customers early

Don't wait for the cancellation email. Look for leading indicators: declining usage, support tickets, failed payments, approaching the tenure danger zone. Tools like ChurnHalt can automate this by analysing your Stripe data and flagging at-risk subscribers before they cancel.

3. Segment and act differently

Not all churn is the same. A customer on a $19/mo plan who churns after one month needs a different intervention than a $500/mo customer who's been with you for a year and is suddenly disengaging. Segment your churn analysis by plan, tenure, acquisition source, and behaviour.

4. Recover failed payments

Involuntary churn (failed payments leading to cancellation) can account for 20–40% of total churn. Smart retry logic, card update emails, and pre-dunning can recover a significant portion of these.

5. Talk to churned customers

Exit surveys and churn interviews are underrated. The patterns you find will inform product decisions, pricing changes, and support improvements. Even a short "What made you cancel?" email can surface actionable insights.