‍What Is MRR Churn?

MRR Churn measures the monthly revenue lost from existing customers who either canceled or downgraded their subscription.

💡 Think of it as the opposite of MRR growth — it’s the drag on your revenue engine.

While it doesn’t include expansion revenue (from upsells or add-ons), it gives you a clear view of the downside risk in your recurring revenue model.

Why It Matters

A 5% churn rate might not sound alarming… until you realize it compounds month after month. If you’re not replacing lost revenue fast enough, it becomes nearly impossible to achieve sustainable growth.

Tracking MRR Churn helps you:

• Measure customer satisfaction through real dollars
• Diagnose retention problems before they snowball
• Improve forecasting accuracy and revenue predictability
• Support investor conversations and board reporting with clarity

How to Calculate MRR Churn

Here’s the basic formula:

MRR Churn Rate = (Churned MRR ÷ Starting MRR) × 100

• Churned MRR: Total recurring revenue lost in the month from cancellations and downgrades
• Starting MRR: Total recurring revenue at the beginning of the month

Example:

• Starting MRR: $100,000
• Churned MRR: $4,000
• MRR Churn Rate = (4,000 ÷ 100,000) × 100 = 4%

Gross vs. Net MRR Churn

To get a complete picture of revenue retention, it’s helpful to track both Gross and Net MRR Churn.

• Gross MRR Churn: Only includes revenue lost — from cancellations and downgrades.
• Net MRR Churn: Includes churn but offsets it with expansion revenue (from upsells or add-ons).

Net MRR Churn Rate = (Churned + Contraction – Expansion MRR) ÷ Starting MRR

Example:

If you lost $5,000 due to churn, had $2,000 in downgrades, and gained $3,000 from upsells:

Net MRR Churn = (5,000 + 2,000 - 3,000) ÷ 100,000 = 4%

What’s a Healthy MRR Churn Rate?

The answer depends on your stage and segment, but here are some benchmarks:

The lower, the better. And if you’re seeing negative Net MRR Churn (where upsells outpace losses), you’re in elite company.

Reducing MRR Churn: What Works

Here are some ways we’ve seen leading SaaS companies reduce churn:

• Onboard with intention: Customers are more likely to churn if they never activate in the first place.
• Proactive success outreach: Identify at-risk accounts before the renewal period.
• Flexible plans: Offering downgrade paths can save customers who might otherwise cancel.
• Track product engagement: Low usage is often the first signal before churn.
• Collect feedback on every cancellation: Use it to refine your pricing, UX, and support.

Why Manual Churn Tracking Breaks Down

If you’re still relying on spreadsheets to track churn, you’re probably familiar with:

• Inconsistent definitions of churn
• Misclassified downgrades or upgrades
• Time wasted chasing data from billing and CRM tools
• Disconnected dashboards across Finance, CS, and RevOps

How TrueRev Automates MRR Churn Tracking

TrueRev helps you:

• Automatically calculate churn across all customers
• Segment churn data by cohort, plan, or contract type
• Visualize retention trends in a CFO-ready dashboard
• Sync with QuickBooks to align bookings, billings, and revenue

No more data wrangling. No more guesswork. Just clean, actionable metrics your whole team can trust.

Final Takeaway

MRR Churn doesn’t just measure lost revenue — it reveals the long-term health of your business.

If you’re not tracking it accurately (and consistently), you’re flying blind.