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Revenue Churn

The percentage of recurring revenue lost from existing customers through cancellations and downgrades in a given period, measuring the direct financial impact of customer attrition.

Revenue churn captures the dollar impact of customer losses and contractions. It is calculated as (Churned MRR + Contraction MRR) / Starting MRR. Unlike logo churn, revenue churn weights each customer by their spend, making it a more accurate measure of financial impact. Losing a $50K/year enterprise customer hurts revenue churn far more than losing ten $200/year individual customers.

Gross revenue churn counts only losses (cancellations and downgrades). Net revenue churn subtracts expansion revenue from existing customers. When net revenue churn is negative, existing customers are growing in value faster than they are leaving, indicating excellent product-market fit and effective monetization.

For SaaS businesses, revenue churn targets vary by segment. Enterprise SaaS should target under 5% annual gross revenue churn. Mid-market should target under 10%. SMB products often see 15-25% annual churn, which is acceptable if acquisition costs are proportionally lower. The key is that revenue churn multiplied by your payback period should leave enough customer lifetime to generate attractive LTV:CAC ratios.

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