Gross Churn is the percentage of revenue lost due to customers cancelling or downgrading their subscriptions.
These categorizations are based on the Gross Revenue Retention (GRR) benchmarks:
| Segment/Channel | Excellent (Low Churn) | Good (Acceptable Churn) | High (Concerning Churn) |
|---|---|---|---|
| Customer Segment (by ACV) | |||
| Enterprise (>$150k ACV) | < 2% | 2% - 3% | > 3% |
| Mid-Market ($5k-$150k ACV) | < 4% | 4% - 5% | > 5% |
| Small Business (<$5k ACV) | < 8% | 8% - 10% | > 10% |
| Sales Channel (GTM Motion) | |||
| Dedicated Touch | < 2% | 2% - 3% | > 3% |
| High Touch | < 3% | 3% - 5% | > 5% |
| Medium Touch | < 4% | 4% - 6% | > 6% |
| Low Touch | < 12% | 12% - 15% | > 15% |
| No Touch (Self-Serve) | < 10% | 10% - 15% | > 15% |
Excellent churn rates represent strong customer loyalty and effective retention strategies, often exceeding typical benchmarks for the segment or channel.
Good churn rates are generally within an acceptable range and align with typical benchmarks. While there's always room for improvement, these rates likely indicate a reasonably healthy business.
High churn rates are concerning and suggest potential issues with product-market fit, customer satisfaction, onboarding, value delivery, or competitive pressures. These rates warrant investigation and action.
Enterprise and Dedicated Touch models typically require the lowest churn rates due to the high value and cost associated with each customer
Low Touch and No Touch models may tolerate slightly higher churn rates due to the higher volume of customers and potentially lower ACV [e.g., our conversation]. A Low Touch GTM motion typically targets a GRR of 85%, implying a 15% churn rate
The benchmarks can vary depending on the specific industry, market conditions, and the maturity of the business.
It is crucial to track your churn rates over time and compare them to your own historical performance and relevant industry benchmarks.
Focusing on delivering recurring impact is essential for achieving and maintaining excellent retention rates across all segments and channels
How to Calculate Gross Churn
Gross churn comes in two variants, both plain text.
Revenue: Gross revenue churn rate = MRR lost to cancellations and downgrades during the period / MRR at the start of the period x 100
Customer: customers lost in the period / customers at the start of the period x 100
The numerator counts cancellations and downgrades, including involuntary losses from failed payments. Expansion revenue from upsells and cross-sells is excluded by definition, which is what separates gross churn from net churn.
Illustrative calculation with round numbers, not a real company. Suppose a company starts the month with $100,000 in MRR, loses $4,000 to cancellations and $1,000 to downgrades. Gross churn is $5,000 / $100,000 = 5% for the month.
One measurement note: SaaS Capital prefers annual measurement on a static pool of customers. Monthly churn distorts in fast-growing companies, because new MRR inflates the denominator.
Gross Churn vs Net Churn
The difference is whether expansion revenue counts.
| Gross churn | Net churn | |
|---|---|---|
| Counts cancellations and downgrades | Yes | Yes |
| Counts expansion (upsells, cross-sells, price rises) | No | Yes |
| Possible range | Cannot go below 0%; GRR caps at 100% | Can be negative; NRR can exceed 100% |
Because gross churn ignores expansion, it is the cleaner read on how much revenue you are actually losing. SaaS Capital's annual survey of hundreds of private SaaS companies found average gross revenue retention of 90% while net retention averaged exactly 100%. The catch with net churn alone: two companies can both report 150% net retention while one holds 95% gross retention and the other just 60%. Net hides the difference, which is why you watch both. See net churn, negative churn, and the combined churn and net retention view.
What a Good Gross Churn Rate Looks Like
For a single anchor, SaaS Capital's annual survey put average gross revenue retention at 90%, which implies roughly 10% annual gross churn for the average private SaaS company. The segment and channel table above breaks that down further. For the partnership lens on retention, see partner-influenced retention.
Frequently Asked Questions
What's the difference between NRR and GRR?
GRR (gross revenue retention) strips out expansion revenue and can never exceed 100%. NRR (net revenue retention) includes upsells, cross-sells, and price increases, so it can exceed 100%. GRR is always equal to or lower than NRR, which makes it the stricter measure of retention.
What are the two types of churn?
Voluntary churn, where customers choose to cancel or downgrade, and involuntary churn, where payments fail or cards expire. Both count in the numerator of gross churn, and separating them tells you whether the problem is the product or the billing.