Alp SuleimanGrowth Partner

Benchmarks

What is a good churn rate?

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Short answer

In SaaS Capital's 2025 survey the median gross revenue retention of private B2B SaaS companies is 91%; with churn defined as one minus gross retention, that is about 9% annual revenue loss. Gross retention must be at least 90% to have a shot at performance parity with peers. Loss is lower at higher ACV.

Ranges by segment

SegmentRangeContext
Private B2B SaaS, all companiesGross retention 91% → churn ≈ 9%1Churn = 100 minus gross retention, the source's own definition. 2025 survey.
ACV above $250kGross retention 95% → churn ≈ 5%1Below $250k gross retention is about 91%.
Peer-parity thresholdGross retention at least 90% → churn at most ≈ 10%1SaaS Capital: gross retention is a table-stakes benchmark.
By contract: monthlyGross retention 89% → churn ≈ 11%1Median for companies on monthly contracts.
By contract: annualGross retention 90% → churn ≈ 10%1Median for companies on annual contracts.
By contract: multi-yearGross retention 94% → churn ≈ 6%1Median for companies on multi-year contracts.
SMB / mid-market SaaS, per user~60% retained at month 6 is good → ~40% lost2Loss derived from Lenny's retention figure; users, not revenue.
Enterprise SaaS, per user~70% retained at month 6 is good → ~30% lost2Derived from Lenny's retention figure.

Reminder: These ranges are reference points, not targets. Your segment, contract structure and stage change the number.

Churn rate

How to read it

  • The sources do not publish churn directly; they publish gross revenue retention. The churn figures above are a simple derivation: 100 minus those retention figures.
  • Monthly and annual churn get confused. If monthly churn is m, annual loss is 1 − (1 − m)^12: 0.5% monthly is about 5.8%, 1% monthly about 11.4%, 3% monthly about 30.6% a year. That is arithmetic, not a benchmark.
  • Revenue churn and customer (logo) churn are different things. Losing one large customer weighs differently from losing the same number of small ones.

What moves this metric

  • 01

    Voluntary vs involuntary churn

    Is the customer leaving by choice, or is a payment failing? The fixes differ.

  • 02

    The first 90 days

    Most early loss is decided in onboarding. Pull the first-value moment forward.

  • 03

    Segment and ACV

    In SaaS Capital's data gross retention is higher at higher ACV. Choosing the right customer also chooses your churn.

  • 04

    Contract length

    Multi-year contracts appear with higher gross retention in SaaS Capital's data.

Calculate your own

NRR calculatorGlossary term: Churn and NRR →

Frequently asked

Is 1% monthly churn good?

Arithmetically, 1% monthly is about 11.4% annual loss, close to SaaS Capital's 90% gross retention threshold. It still depends on your segment and on whether you count revenue or customers.

Can churn be zero?

In practice, no. Even for high-ACV companies the median gross retention is around 95%; aim to reduce loss meaningfully, not to eliminate it.

Should I track churn through NRR or gross retention?

Both. Gross retention shows the loss, NRR shows it net of expansion. Looking only at NRR can hide weak retention.

Sources

  1. 1.SaaS Capital, 2025 B2B SaaS Retention Benchmarks (Research Brief 32)Year and scope: 2025. 1,000+ private B2B SaaS companies ($1M+ ARR), December 2023 to December 2024 customer cohort. Medians by ACV, contract length and funding type.
  2. 2.Lenny Rachitsky, “What is good retention?” (Lenny's Newsletter, 20 growth practitioners plus public company data)Year and scope: 2020. User retention: share of signups still active after 6 months. Net revenue retention: 12-month. Consumer and B2B SaaS categories.