Churn

The share of customers or revenue lost per period; the leak rate that every other SaaS metric must out-run.

Churn is the leak in the bucket: customers who cancel, logo churn, or revenue lost, revenue churn, expressed as a monthly percentage. Five percent monthly churn means a typical customer tenure of 20 months, and the compounding is brutal, at 5 percent monthly, a business keeps barely a third of a year's signups after two years. The inverse, retention, is why SaaS valuations reward even modest churn improvements: churn is the terminal velocity of every growth strategy.

Why it matters to an indie builder: churn is the metric that decides whether your growth is real. Acquisition without retention is a treadmill, and the treadmill speeds up as the base grows: at 1,000 customers and 4 percent churn you must add 40 customers monthly just to stand still, which quietly consumes most marketing budgets. For a solo founder, churn also carries information: every cancellation is a recorded verdict, and the aggregate of those verdicts, exit surveys, support logs, usage patterns of survivors versus leavers, is the most honest product roadmap you will ever receive.

A concrete example: a tool at $12K MRR with 4.5 percent monthly churn adds $700 of new MRR monthly, net growth $160, nearly flat. Three fixes ship in one quarter: onboarding reaches value in the first session, a monthly usage report email reminds silent accounts of the value, and dunning recovers the third of churn that was expired cards alone. Churn lands at 2.8 percent. Same acquisition, net growth now $364 monthly, and the revenue curve visibly bends without one new visitor to the site. This is the arithmetic that makes retention the first priority of every bootstrapped business.

Common mistakes: watching logo churn while revenue churn tells the opposite story (losing small accounts while big ones expand is net retention above 100 percent, a good problem; the reverse is a silent emergency), measuring churn on the whole base instead of cohorts, where the truth segments, ignoring involuntary churn, failed payments are routinely 20 to 30 percent of total losses and are fixable with retry logic and card-updater emails, and celebrating winbacks as retention, they are re-acquisition at double the cost. See mrr, ltv and icp for the metrics churn feeds.

Churn rate is typically calculated by dividing the number of customers lost during a specific time period by the total number of customers at the beginning of that period. For example, if a company starts a quarter with 100 customers and loses 5 of them by the end of that quarter, the churn rate is 5/100 or 5%.