MRR Churn Calculator

Enter your current monthly recurring revenue, the percentage of revenue that churns each month, and the new MRR your sales and signups add monthly. The calculator runs the next twelve months and returns where MRR lands, the total revenue churn will take from you along the way, and the net change. The quarter-by-quarter table shows the shape of the curve, which matters as much as the endpoint: with constant inputs, a growing base adds most in month one and less every month after, because churn takes more dollars as the base gets bigger.

From book subscriptions to SaaS metrics

Monthly recurring revenue and churn are the accounting language of the subscription business, and that business is far older than software. Publishers of books and periodicals in seventeenth-century England pioneered selling access to a stream of future issues rather than a single finished object, taking payment up front for content not yet printed. The earliest known example is John Minsheu's polyglot dictionary Ductor in Linguas, financed in 1617 by readers who paid before the book was set in type; the method peaked in Britain between roughly 1720 and 1750, when it funded around 5% of published titles. The German book trade of the following century formalized the same practice as Pränumeration, advertising a planned but unprinted work and collecting advances from subscribers to fund production. What those arrangements share with a software subscription is exactly what MRR measures: revenue that arrives on a schedule instead of once per sale.

Paying for computing the same way was imagined long before it was practical. In 1961 John McCarthy told an audience at MIT's centennial celebration that computing might someday be organized as a public utility just as the telephone system was a public utility, and that the computer utility could become the basis of a new and important industry. The commercial form took decades to arrive. In the late 1990s, application service providers hosted business software remotely from their own data centers rather than installing it on each customer's own servers, and software as a service grew directly out of that model. The phrase "software as a service" appears in a February 2001 white paper from the Software and Information Industry Association, and Salesforce, founded on 8 March 1999 by Marc Benioff with Parker Harris, Dave Moellenhoff and Frank Dominguez, built the template most SaaS companies still follow: no perpetual license, a recurring monthly fee, and the vendor operating the infrastructure.

The word churn is borrowed from the agitation of a butter churn, customers stirred continuously into and out of a subscriber base, and it came into heavy use in the telephone and cellular industry, where switching providers was easy and attrition ran high. As subscription software matured through the late 2000s and early 2010s, operators and investors settled on a shared vocabulary of MRR, churn, customer acquisition cost and lifetime value. The essays David Skok published on his For Entrepreneurs blog, SaaS Metrics 2.0 above all, were among the most cited, and did much to popularize the idea of negative churn for the case where expansion revenue from existing customers outweighs what cancellations remove, the condition that makes the ceiling described below disappear.

How the projection works

Each month the model removes the churned fraction of the current base, then adds the new MRR:

MRR_next = MRR_current × (1 − churn ÷ 100) + new MRR

With the defaults — $18,500 of MRR, 3.2% monthly revenue churn, $2,400 of new MRR — month one churns 18,500 × 0.032 = $592, leaving 17,908, and adding 2,400 gives $20,308. Month two churns $650 of the larger base and ends at $22,058.14. Month three ends at $23,752.28, which the table rounds to $23,752 in its first row. After twelve iterations MRR reaches $36,757.

The cumulative churn figure is the sum of every month's churned amount: $10,543 over the year on the defaults. It reconciles exactly with the other outputs — twelve months of new MRR is 12 × 2,400 = $28,800 added, minus $10,543 churned, for a net change of $18,257. Nearly 37 cents of every new dollar sold went to replacing revenue that cancelled.

The churn ceiling

Constant churn and flat new MRR cannot grow forever. Churn is a percentage, so the dollars it removes grow with the base; new MRR is a fixed dollar amount. The two meet at a steady state:

MRR_ceiling = new MRR ÷ (churn ÷ 100)

For the defaults that is 2,400 ÷ 0.032 = $75,000. At that level 3.2% churn removes $2,400 a month, exactly what sales adds, and MRR stops moving. The approach is asymptotic: each year closes about a third of the remaining gap at 3.2% churn, since the gap shrinks by a factor of 0.968 every month. The defaults start at 25% of the ceiling and finish the year at 49% of it.

The ceiling is the most useful single number in this model because it converts a churn rate into a revenue limit. Halving churn doubles the ceiling without selling anything more. Cut the default churn from 3.2% to 2% and the ceiling jumps from $75,000 to $120,000, while the twelve-month projection rises from $36,757 to $40,351 — the ceiling moves faster than the forecast, which is why retention work pays off for years rather than quarters.

Three scenarios

A side project at $850 MRR, 2% churn and $150 of new MRR a month ends month one at 850 × 0.98 + 150 = $983 and finishes the year around $2,282. Churn costs only $368 across the whole year, because the base is small. The ceiling is 150 ÷ 0.02 = $7,500, far away; at this scale distribution is the constraint, not retention.

A startup on the default inputs finishes the year at $36,757 with $10,543 lost to churn. By month twelve the base of roughly $35,500 is churning about $1,136 a month — nearly half the $2,400 being added. This is the stage where churn starts dictating the growth rate and where a point of retention is worth more than a point of sales.

A scale-up at $210,000 MRR, 1.5% churn and $14,000 of new MRR ends month one at $220,850 and the year at about $329,978, having churned roughly $48,000. The ceiling is 14,000 ÷ 0.015 = $933,333, so there is headroom, but $48,000 of churned revenue is also the clearest expansion target on the books: winning back or upselling a fraction of it usually costs less than the equivalent new-logo sales.

Revenue churn, customer churn and net revenue retention

This calculator works in revenue churn, which weights every lost dollar equally. Customer churn counts logos instead, and the two diverge whenever account sizes vary. Take 200 customers paying $20,000 of MRR between them: losing the single $2,000 enterprise account is 0.5% customer churn but 10% revenue churn, while losing twenty $19 subscriptions is 10% customer churn and only 1.9% revenue churn. Revenue churn is the one that belongs in a cash projection, because it is the figure a cash flow actually feels.

Net revenue retention folds expansion into the picture. It measures what a cohort of existing customers is worth a period later, upgrades included, and public SaaS companies routinely report NRR above 100% — the installed base grows on its own. If your expansion revenue is reliable, you can enter net churn here instead of gross: a company with 3% gross churn and 1.5 points of expansion effectively churns 1.5%. With NRR above 100% the effective churn rate is negative and the ceiling disappears entirely, which is exactly why investors prize the metric.

Where the flat assumptions break down

Both constants in this model drift in practice. New MRR is rarely flat: it scales with marketing spend, headcount and seasonality, and a company adding $2,400 a month today usually intends to add more next year. Churn is not flat either — new cohorts churn hardest in their first months and settle with tenure, so a fast-growing company's blended churn rate overstates the long-run rate of its mature base. Annual prepay contracts concentrate churn at renewal dates instead of spreading it evenly, which makes monthly figures lumpy.

Treat the projection as a baseline, not a forecast. Its value is sensitivity: hold two inputs still, move the third, and watch the endpoint and ceiling respond. If a plausible improvement in churn moves the twelve-month number more than a plausible improvement in sales, the model has told you where the leverage is.

Projections here extrapolate constant rates and are planning aids, not forecasts of any company's revenue. See the site disclaimer.

Frequently asked questions

What is a good monthly revenue churn rate for SaaS?

Under 1% monthly gross revenue churn is excellent and typical of enterprise contracts, 2 to 3% is normal for SMB products, and above 5% signals a retention problem. Compounding makes small differences large: 2% monthly removes about 21.5% of the revenue base over a year, while 5% monthly removes almost 46%.

How do I calculate my monthly MRR churn rate?

Divide the MRR lost to cancellations and downgrades during a month by the MRR you started the month with, then multiply by 100. Losing $592 from an $18,500 base is 592 ÷ 18,500 × 100 = 3.2%. Count downgrades as well as full cancellations, and leave expansion out — that belongs in net churn, which is a separate metric.

Why does MRR growth stall even though new sales stay constant?

Because churn scales with the size of the base while flat new MRR does not. Adding $2,400 a month against 3.2% churn converges on a ceiling of 2,400 ÷ 0.032 = $75,000, the level where churn removes exactly $2,400 a month and cancels the new revenue. Well before that point growth visibly flattens.

What is the difference between gross and net MRR churn?

Gross churn counts only lost revenue from cancellations and downgrades. Net churn subtracts expansion revenue from existing customers, so it can be negative. A company losing $600 a month to cancellations while upgrades add $750 has positive gross churn but net churn of minus $150 — its installed base grows without a single new customer.

Is 5% monthly churn bad for a startup?

For a B2B product on monthly billing, yes in most cases. It compounds to losing about 46% of the revenue base over a year, so nearly half of everything sold must be resold just to stand still. Very early products still searching for fit sometimes run there temporarily, and consumer apps tolerate more, but sustained 5% makes efficient growth close to impossible.