"What's a good churn rate?"
It's the question every SaaS founder asks—and one of the hardest to answer. Your industry, customer segment, pricing model, and company stage all affect what "good" looks like.
To create definitive benchmarks, we analyzed churn data from 500+ SaaS companies across every major category. The result is the most comprehensive churn benchmark report available for 2025.
Here's what we found—and where you likely stand.
The median monthly SaaS churn rate is 4.7%, but varies dramatically by segment: SMB (5-7%), Mid-market (3-5%), Enterprise (1-2%). Top-quartile companies achieve 40-60% lower churn than median.
What's a "Good" Churn Rate?
Before diving into benchmarks, let's establish what we're measuring. There are two types of churn that matter:
Logo churn (customer churn): The percentage of customers who cancel in a given period.
Revenue churn (MRR churn): The percentage of recurring revenue lost to cancellations and downgrades.
Revenue churn typically paints a more accurate picture since losing a $10,000/month customer hurts more than losing ten $100/month customers—even though logo churn would show the latter as worse.
Good monthly churn: 3-5% (SMB), 2-3% (Mid-market), <1% (Enterprise)
Good annual churn: <10% total, with top performers below 5%
Best-in-class NRR: >120% (expansion revenue exceeds churn)
Churn Benchmarks by Customer Segment
Your target customer has the biggest impact on expected churn. Here's what the data shows:
| Segment | Median Monthly | Top Quartile | Bottom Quartile |
|---|---|---|---|
| SMB (<$1K ACV) | 5.8% | 3.2% | 9.1% |
| Mid-Market ($1K-$25K ACV) | 3.4% | 1.8% | 5.7% |
| Enterprise (>$25K ACV) | 1.4% | 0.6% | 2.8% |
Why the dramatic difference? A few factors:
- Switching costs: Enterprise deals involve procurement, integration, training, and organizational change. SMB tools can be swapped in an afternoon.
- Decision makers: Enterprise buyers evaluate thoroughly before committing. SMB users often sign up impulsively and churn just as fast.
- Success resources: Enterprise customers get dedicated CSMs. SMB customers get documentation.
Churn Benchmarks by Industry
Industry context matters almost as much as customer segment:
| Industry | Median Monthly Churn | Annual Churn Range |
|---|---|---|
| Developer Tools | 4.2% | 35-55% |
| Marketing SaaS | 5.1% | 45-65% |
| HR/Workforce | 2.8% | 25-40% |
| Fintech | 2.4% | 22-35% |
| E-commerce Tools | 4.8% | 40-60% |
| Healthcare SaaS | 1.9% | 18-28% |
| Education | 3.6% | 32-48% |
Healthcare and Fintech show the lowest churn—both are heavily regulated industries where switching creates compliance risk. Once you're in, you tend to stay in.
Marketing SaaS has the highest churn. Why? Results are visible (or not) quickly, competition is fierce, and the category is saturated with alternatives. If your marketing tool doesn't show ROI in 90 days, you're gone.
Churn Benchmarks by Pricing Model
How you charge affects how long customers stay:
| Pricing Model | Median Monthly Churn | Notes |
|---|---|---|
| Monthly billing | 6.2% | Low commitment, easy exit |
| Annual billing | 2.1% | Measured at renewal points |
| Usage-based | 4.5% | Correlates with business cycles |
| Freemium → Paid | 5.4% | Higher initial, stabilizes later |
Annual contracts cut churn by 60-70% compared to monthly. The math is simple: you only have one "decision point" per year instead of twelve.
If you're on monthly billing and not offering annual discounts, you're leaving retention on the table.
What's Churn Costing You?
See your exact annual loss and what you'd save by cutting churn in half.
Calculate Your Churn Cost →How to Calculate Your Churn Rate
Before comparing yourself to benchmarks, make sure you're calculating correctly:
Monthly Customer Churn Rate
(Customers lost during month / Customers at start of month) × 100
Example: You started January with 500 customers and lost 25. Your monthly churn is 5%.
Monthly Revenue Churn Rate
(MRR lost to churn + MRR lost to downgrades) / MRR at start of month × 100
Example: You started with $100,000 MRR, lost $4,000 to cancellations and $1,000 to downgrades. Your gross MRR churn is 5%.
Net Revenue Retention (NRR)
(Starting MRR + Expansion - Contraction - Churn) / Starting MRR × 100
Example: $100K starting MRR, $8K expansion, $2K contraction, $4K churn = 102% NRR
NRR above 100% means your existing customers are growing faster than you're losing them—the holy grail of SaaS metrics.
Using end-of-month customer count: Always use start-of-month as your denominator.
Ignoring downgrades: A customer moving from $500/mo to $200/mo is churn, even if they didn't cancel.
Not excluding trial conversions: Trial users who don't convert aren't churn—they never became customers.
What Top Performers Do Differently
Companies in the top quartile (lowest 25% churn) share common practices:
1. They obsess over onboarding
67% of churn happens in the first 90 days. Top performers invest disproportionately in getting customers to "first value" quickly—the moment they experience the core benefit of your product.
Slack measures "2,000 messages sent." Dropbox measures "files synced across devices." What's your first-value metric?
2. They measure leading indicators
Churn is a lagging indicator—by the time someone cancels, you've already lost them. Top performers track engagement signals that predict churn 30-60 days in advance: login frequency, feature usage, support tickets, NPS scores.
3. They create switching costs
Not artificial lock-in, but genuine value accumulation. The longer someone uses Notion, the more valuable their workspace becomes. The longer someone uses RevMine, the more tokens their customers have earned.
What value accumulates the longer someone uses your product?
4. They make customers stakeholders
This is where token economics shine. When customers own something that appreciates as your company grows, their success becomes tied to yours. Leaving isn't just losing a tool—it's walking away from accumulated value.
How to Reduce Your Churn Rate
Based on what top performers do, here are actionable strategies:
Push for annual contracts. Offer 15-20% discounts for annual prepay. The math works: even at 20% off, you're ahead if it cuts churn from 6% monthly to 2%.
Fix your first 90 days. Map your customer journey and identify where people drop off. Automate onboarding nudges. Add friction to cancellation but only after removing friction from success.
Build an early warning system. Score accounts on engagement and intervene before they go dark. A proactive "noticed you haven't logged in" email beats a reactive "please don't leave" one.
Create compounding value. Whether it's data, content, community, or tokens—build something that becomes more valuable over time. Make staying the default.
Turn customers into stakeholders. When customers benefit from your growth, they're incentivized to help you succeed—not just use your product. This is the fundamental shift token economies enable.
Ready to Turn Customers Into Stakeholders?
See how revenue-backed tokens can reduce your churn by aligning customer success with company growth.
Build Your Token Economy →Methodology
This analysis includes data from 512 SaaS companies collected between January 2024 and December 2024. Companies were segmented by primary customer type (determined by median ACV), self-reported industry category, and billing model. Outliers beyond 3 standard deviations were excluded. Data was anonymized and aggregated; no individual company metrics are disclosed.