Monthly churn rate is the percentage of subscribers who cancel each month. What's acceptable varies dramatically by customer segment and ARPU.
Benchmarks by Customer Segment
| Segment | Monthly Churn | Annual Churn | Notes |
|---|---|---|---|
| Enterprise ($5k+ ACV) | 0.5–1.0% | 6–12% | Multi-year contracts; churn is often 0 until renewal |
| Mid-market ($1k–5k ACV) | 1.0–2.0% | 11–22% | Quarterly reviews; churn often tied to budget cycles |
| SMB (<$1k ACV) | 2.0–5.0% | 22–46% | Higher turnover; product must be self-evidently valuable |
| Consumer subscription | 5–15% | 46–80% | Low switching cost; loyalty built through habit/content |
Benchmarks by ARR Stage
According to various benchmark reports (ProfitWell, SaaStr): - <$1M ARR: 10–20% annual churn is common (small sample, less reliable) - $1M–$10M ARR: Target <10% annual, <15% is acceptable - $10M–$50M ARR: Target <8% annual - $50M+ ARR: Public SaaS median ~7–8% gross annual churn - Best-in-class: Veeva, Salesforce, and enterprise platforms under 4% annual
Gross Churn vs Net Churn
Gross churn: Revenue lost from cancellations only Net churn (NDR/NRR): Revenue lost from cancellations MINUS revenue gained from upgrades
A company can have 8% gross churn but negative net churn (105%+ NRR) if expansion revenue from upgrades exceeds cancellation revenue. Both metrics matter.
What Causes Above-Average Churn?
- Product-market fit gaps: Customers don't fully solve their problem
- Pricing plan mismatch: Wrong tier for the customer's actual usage
- Onboarding failures: Customers never reach the "aha moment"
- Support gaps: Customers with unresolved issues churn 3–5× faster
- Budget pressure: SMBs cancel discretionary spend in downturns first
Model your LTV at different churn rates with the Churn Cohort Calculator.