What Is Revenue Churn?

Revenue churn measures the dollar value of recurring revenue lost during a given period. This could come from customers canceling entirely—or staying but downgrading their plans.

It’s typically expressed as a percentage of total ARR or MRR.

How to Calculate Revenue Churn

Gross Revenue Churn Rate:

(Churned Revenue in Period / Starting MRR or ARR) × 100

Let’s say:

• Starting MRR = $200,000
• Cancellations and downgrades total $20,000

Revenue Churn Rate = (20,000 / 200,000) × 100 = 10%

This tells you that 10% of your recurring revenue base contracted during that period.

Two Main Types of Revenue Churn

✅ Churn from Lost Customers

• Revenue lost due to full cancellations
• Usually reported as the full contract value had it renewed

✅ Churn from Downgrades

• Revenue lost from customers who renewed at a lower rate or removed features/seats
• Reflects shrinking accounts, not lost ones

Both forms hurt your ARR trajectory, but downgrades can be trickier to catch and harder to reverse.

Revenue Churn vs. Net Dollar Retention (NDR)

Where churn measures lost revenue, NDR accounts for both lost and expanded revenue.

NDR = (Starting MRR – Churn + Expansion) / Starting MRR × 100

If you lost $20K to churn but added $30K in upsells: (200,000 – 20,000 + 30,000) / 200,000 = 105% NDR

A strong NDR (>100%) means your existing customer base is growing, even if some customers churn.

Why Revenue Churn Matters

💡 It’s a direct hit to growth: You have to replace lost revenue before growing net new ARR. 💡 It impacts valuation:Investors pay close attention to churn trends when evaluating health. 💡 It signals retention issues: High churn can reveal product gaps, onboarding friction, or pricing misalignment.

You can’t manage what you don’t measure—tracking revenue churn uncovers which customer segments, plans, or behaviors are hurting your bottom line.

How to Reduce Revenue Churn

✅ Segment by Churn Reason Break down churn by cause (price, value, service, competitor, business closure). Not all churn is preventable—but most is predictable.

✅ Strengthen Onboarding and Engagement Reduce early-stage churn by speeding up time-to-value and keeping users engaged from the start.

✅ Track Product Usage & Health Scores Identify at-risk accounts before they churn. Behavior-based alerts can prompt timely outreach.

✅ Invest in Customer Success Make sure your high-revenue customers have access to support, resources, and expansion paths.

✅ Offer Downgrade Paths, Not Just Cancel Buttons Not every churned dollar has to be lost. Provide lower tiers, add-on swaps, or pausing options.

Track Revenue Churn in Real Time with TrueRev

TrueRev helps SaaS teams:

• Monitor churn by cohort, segment, or plan
• Identify and reverse revenue loss trends
• Track NDR alongside churn to assess net impact

No more manual calculations or lagging reports—just clear insights on what’s shrinking your ARR and how to fix it.

Final Thoughts

Revenue churn is the silent killer of SaaS growth. But when you track it properly and respond with strategic plays, you not only plug the leaks—you unlock stronger margins, more predictable revenue, and a healthier business overall.