SaaS Churn Rate Benchmarks 2026: What Is Normal for Your Company?

Research from Recurly, based on 1,200+ subscription sites and 67M+ subscribers, puts the average B2B SaaS monthly churn rate at roughly 3.5% (2.6% voluntary, 0.8% involuntary). In practice, the range is 3-7% with significant variation based on company stage, target market, pricing, and contract structure. For SMB-focused products, 4-6% monthly churn is typical. Mid-market companies average 2-4%, and enterprise SaaS companies with annual contracts commonly achieve under 1% monthly (or under 10% annual) churn. These benchmarks matter as baselines, but the more important question is not whether your churn rate is "normal." It is whether you understand the specific reasons driving it.

After analyzing churn patterns across thousands of SaaS cancellations, I have noticed that the companies fixated on their benchmark number almost always underinvest in understanding the stories behind it.

Key takeaways:

• Average B2B SaaS monthly churn is roughly 3.5%. Recurly's benchmark data across 1,200+ subscription sites shows 2.6% voluntary and 0.8% involuntary, but the range spans 3-7% depending on company stage, target market, and contract type.
• Small improvements in monthly churn compound dramatically. A 2-percentage-point reduction in monthly churn (from 5% to 3%) means retaining 21% more customers over 24 months at identical acquisition rates, purely from the compounding effect.
• Contract type is a powerful churn lever. Annual contracts average roughly 8.5% annual churn compared to 16% for month-to-month plans, because the upfront commitment reduces impulsive cancellations and improves initial customer fit quality.
• Track logo churn and revenue churn separately. A company can have high logo churn but healthy revenue if small accounts leave while larger ones stay and expand; weighting revenue churn more heavily gives a more accurate picture of business health.

How Should You Measure Churn Rate?

Before comparing yourself to benchmarks, make sure you are measuring the right things.

Logo Churn vs. Revenue Churn

Logo churn (also called customer churn) counts the number of customers who cancel. Revenue churn (also called MRR churn or dollar churn) measures the recurring revenue lost.

These metrics can tell very different stories. A company might lose 20 customers in a month (high logo churn) but only $2,000 in MRR because those were all $100/month accounts. Meanwhile, their remaining customers expanded by $5,000. The logo churn looks bad. The revenue picture is healthy.

Both metrics matter. Logo churn reveals product-market fit issues. Revenue churn reveals whether your highest-value customers are sticking around. Track both, but weight revenue churn more heavily in financial planning.

Gross Churn vs. Net Churn

Gross churn counts all lost revenue from cancellations and downgrades. Net churn subtracts expansion revenue (upgrades, seat additions, add-ons) from gross churn.

A company with 5% gross revenue churn and 7% expansion can report -2% net revenue churn. This means the existing customer base is growing even without adding new customers. Net negative revenue churn is the gold standard for SaaS businesses. ChartMogul's retention research found that companies with net revenue retention at or above 100% grew 1.8x faster than those below that threshold. It is a hallmark of companies with strong product-market fit and effective expansion motions.

Monthly vs. Annual Churn

Monthly and annual churn rates are not simply interchangeable through multiplication. 5% monthly churn does not equal 60% annual churn. The actual annual equivalent is:

Annual churn = 1 - (1 - monthly churn rate)^12

So 5% monthly churn equals approximately 46% annual churn. 3% monthly equals approximately 31% annual. This compounding effect means even small improvements in monthly churn have outsized impact over a year.

Use our churn rate calculator to convert between monthly and annual rates and see how changes in your churn rate affect your customer base over time.

Churn Rate Benchmarks by Company Stage

Your company's maturity is the single biggest predictor of what churn rate to expect.

| Company Stage | Typical Monthly Churn | Annual Equivalent | Key Driver | | --- | --- | --- | --- | | Early stage (pre-PMF, under $300K ARR) | 6-10%+ | 53-72%+ | Still finding product-market fit | | Growth stage (post-PMF, pre-scale) | 3-6% | 31-53% | Onboarding failures, product gaps, poor-fit signups | | Mature stage (at scale) | 1-3% | 11-31% | Competitive dynamics, customer business changes | | Best-in-class | Under 1% | Under 11% | Net negative revenue churn through expansion |

Early Stage (Pre-Product-Market Fit)

Typical monthly churn: 6-10%+

ChartMogul's SaaS Benchmarks Report found that early-stage companies under $300K ARR average 6.5% monthly churn. Before product-market fit, churn rates are volatile and often high. This is expected. You are still learning who your ideal customer is, which features matter, and how to onboard effectively. High churn at this stage is a learning signal, not a failure.

What to watch for: if churn is concentrated in a specific customer segment, that segment may not be your target market. If churn is evenly distributed, the product itself may need fundamental changes.

Do not optimize for churn reduction at this stage. Optimize for learning. Talk to every customer who leaves. Understand what they expected versus what they got. That information is more valuable than the revenue you lost.

Growth Stage (Post-PMF, Pre-Scale)

Typical monthly churn: 3-6%

After finding product-market fit, churn should stabilize and begin decreasing. At this stage, churn typically comes from three sources: customers who are not your ideal profile but signed up anyway, onboarding failures where good-fit customers did not reach activation, and product gaps that become apparent after initial adoption.

This is the stage where systematic churn analysis pays the highest dividends. Each point of churn reduction at growth stage compounds into significant revenue retention as you scale. Investing in understanding why customers leave (through exit interviews or feedback conversations) has the highest ROI here.

Mature Stage (Scale)

Typical monthly churn: 1-3%

Mature SaaS companies with established products and well-defined markets typically see monthly churn in the 1-3% range. At this stage, churn drivers shift from product-market fit issues to competitive dynamics, customer business changes, and value optimization.

Best-in-class mature companies achieve net negative revenue churn, meaning their existing customer base grows through expansion even after accounting for cancellations.

Churn Rate Benchmarks by Target Market

Who you sell to dramatically affects your churn profile.

| Target Market | Typical Monthly Churn | Why | | --- | --- | --- | | SMB (under 50 employees) | 4-7% | Low switching costs, higher business failure, price sensitivity | | Mid-Market (50-500 employees) | 2-4% | Moderate switching costs, competitive displacement risk | | Enterprise (500+ employees) | 0.5-1.5% | High switching costs, multi-year contracts, dedicated CSMs |

SMB (Small and Medium Business)

Typical monthly churn: 4-7%

SMBs churn at higher rates for structural reasons:

• Lower switching costs. A 5-person company can adopt a new tool over a weekend. A 500-person company needs months of planning.
• Higher business failure rate. Small businesses close, pivot, and run out of budget more frequently.
• More price sensitivity. SMBs scrutinize every subscription line item, especially during revenue downturns.
• Lower onboarding investment. SMBs are less likely to invest time in thorough onboarding, leading to lower activation rates.
• Involuntary churn. ProfitWell research via GoCardless estimates involuntary churn accounts for 20-40% of total churn, and failed payments hit SMBs especially hard due to cash flow volatility.

Monthly churn of 5% for an SMB-focused SaaS product is within normal range. Below 3% is strong. Above 7% signals a need for investigation.

Mid-Market

Typical monthly churn: 2-4%

Mid-market customers (50-500 employees) sit between SMB and enterprise on every dimension. They have higher switching costs than SMBs but are not locked into multi-year contracts. They evaluate purchases more carefully but still move relatively quickly.

Churn at this segment is often driven by competitive displacement and evolving requirements. These companies are growing fast and may outgrow your product, or they may consolidate vendors as they mature.

Enterprise

Typical monthly churn: 0.5-1.5%

Enterprise customers have the lowest churn rates due to:

• High switching costs. Migrating off an enterprise product involves months of work, data migration, retraining, and process redesign.
• Multi-year contracts. Annual or multi-year agreements prevent impulsive cancellations.
• Deeper integration. Enterprise products are typically woven into critical workflows, making replacement risky.
• Dedicated success teams. Enterprise accounts usually have named CSMs who proactively manage the relationship.

Monthly churn below 1% is the standard for enterprise SaaS. Revenue churn should be net negative through expansion.

Churn Rate Benchmarks by Pricing Tier

Your price point is a strong predictor of expected churn behavior.

| Pricing Tier | Monthly Price | Typical Monthly Churn | Key Factor | | --- | --- | --- | --- | | Low-touch / self-serve | $10-$100 | 5-8% | Low evaluation, high involuntary churn | | Mid-price | $100-$500 | 3-5% | Better initial fit, conscious cancellation decision | | High-price | $500-$5,000 | 1-3% | Higher switching costs, more onboarding investment | | Enterprise | $5,000+ | Under 1% | Annual contracts, rigorous procurement, managed relationships |

Low-Touch / Self-Serve ($10-$100/mo)

Typical monthly churn: 5-8%

Low-price, self-serve products see the highest churn rates. Customers sign up quickly with minimal evaluation, which means many are poor fits from the start. The low price also means low perceived switching cost: canceling a $29/month tool is a non-event.

Involuntary churn (failed payments) accounts for a significant portion at this tier. Implementing proper dunning flows (retry logic, card update reminders, grace periods) can reduce total churn by 20-40% without improving voluntary retention at all.

Mid-Price ($100-$500/mo)

Typical monthly churn: 3-5%

At this price range, customers evaluate the purchase more carefully before signing up, which improves initial fit. The monthly cost is high enough that cancellation requires a conscious decision but low enough that it does not require extensive internal approval.

High-Price ($500-$5,000/mo)

Typical monthly churn: 1-3%

Higher-priced products see lower churn because customers invest more in evaluation, onboarding, and adoption. The cost of switching is higher in both financial and operational terms. These customers are also more likely to engage with customer success resources.

Enterprise ($5,000+/mo)

Typical monthly churn: under 1%

At enterprise price points, churn is measured in single-digit annual percentages. Contracts are annual or multi-year. Procurement processes are rigorous. The relationship between vendor and customer is actively managed.

Churn Rate Benchmarks by Contract Type

Contract structure has a direct and measurable impact on churn.

| Contract Type | Typical Churn Rate | Effective Monthly Rate | Key Insight | | --- | --- | --- | --- | | Monthly | 4-8% monthly | 4-8% | Maximum flexibility for customers, highest cancellation risk | | Annual | 10-20% annual | ~1-2% | Commitment reduces impulsive cancellations, improves initial fit | | Multi-year | 5-10% annual | Under 1% | Churn driven by serious dissatisfaction or corporate restructuring |

Monthly Contracts

Typical monthly churn: 4-8%

Monthly contracts give customers maximum flexibility, which also means maximum optionality to cancel. Any month where the customer questions the product's value, they can leave. There is no commitment period to outlast temporary dissatisfaction or low usage.

Annual Contracts

Typical annual churn: 10-20% (equivalent to ~1-2% monthly)

Data from Fullview shows annual contracts averaging 8.5% annual churn compared to 16% for month-to-month plans. Annual contracts reduce churn dramatically. The customer commits upfront, which changes the psychology of the relationship. During months of low usage, they remain subscribed. This gives the product time to re-engage them before they reach a cancellation decision.

Annual contracts also front-load the evaluation: customers think harder before committing to 12 months. This improves initial fit quality.

Multi-Year Contracts

Typical annual churn: 5-10%

Multi-year deals are common in enterprise SaaS. Churn at this contract length is driven almost entirely by serious dissatisfaction, corporate restructuring, or vendor consolidation.

Churn Rate Benchmarks by Vertical

Industry vertical influences churn through customer characteristics and competitive dynamics.

Developer Tools and Infrastructure

Typical monthly churn: 3-5%

Developer tools see moderate churn. Products that become embedded in CI/CD pipelines or development workflows have high switching costs. Products at the periphery (analytics, monitoring, testing) are easier to swap.

MarTech (Marketing Technology)

Typical monthly churn: 5-8%

MarTech has one of the highest churn rates among SaaS verticals. The market is crowded, switching costs are moderate, and marketing teams frequently experiment with new tools. Budget reallocation during slow quarters hits MarTech subscriptions hard.

FinTech / Financial Services

Typical monthly churn: 2-4%

Financial services tools benefit from high switching costs (data migration, compliance requirements, workflow integration) and risk aversion among users. Once adopted, these tools tend to stick.

HR Tech

Typical monthly churn: 3-5%

HR tools see moderate churn with seasonal patterns. Companies are less likely to switch HR platforms mid-cycle (payroll, benefits, performance reviews follow annual calendars). Churn concentrates around contract renewal periods.

E-Commerce SaaS

Typical monthly churn: 4-7%

E-commerce SaaS churn correlates strongly with merchant business performance. When a Shopify store closes, the apps it used churn too. This business-failure component makes e-commerce SaaS churn structurally higher.

What Does Churn Actually Cost Your Business?

Knowing your churn rate is useful. Knowing what it costs you is motivating.

Revenue Impact

Use our churn cost calculator to model your specific situation. As a rough framework:

A company with $1M ARR and 5% monthly churn needs to add $600K in new revenue annually just to replace what churn takes away. At 3% monthly churn, that replacement burden drops to roughly $360K. The 2 percentage point improvement frees up $240K in growth capacity.

LTV Impact

Churn rate is the denominator in customer lifetime value. Lower churn directly increases LTV, which increases how much you can afford to spend on acquisition while maintaining healthy unit economics. Use our LTV calculator to see how churn rate changes affect your customer lifetime value.

Compound Growth Impact

SaaS growth is the result of new customer acquisition minus churn. When churn is high, you are filling a leaky bucket. Every improvement in retention compounds over time.

Consider two companies, both adding 50 new customers per month:

• Company A: 5% monthly churn. After 24 months: ~760 customers.
• Company B: 3% monthly churn. After 24 months: ~920 customers.

Same acquisition, 21% more customers, purely from a 2-point churn improvement.

How to Improve Your Churn Rate

Benchmarks tell you where you stand. Improvement requires understanding why customers leave. For a comprehensive playbook, see our guide on how to reduce churn in SaaS. Below is a summary of the key steps.

Step 1: Measure Accurately

Ensure your churn calculation is consistent. Define your measurement period, exclude free trials if they distort the metric, and separate voluntary churn from involuntary churn. Many companies discover that their "churn rate" includes trial expirations and failed payments mixed with genuine cancellations, making the number artificially high and the problem appear worse than it is.

Step 2: Reduce Involuntary Churn

Involuntary churn (failed payments) is the lowest-hanging fruit. Implement:

• Smart retries. Retry failed charges at optimal times (e.g., beginning of the month when accounts have funds).
• Card update reminders. Notify customers before their card expires.
• Grace periods. Give customers a window to update payment details before cancellation.
• Account recovery flows. Make it easy for customers whose accounts were canceled due to payment failure to resubscribe without losing data.

This alone can reduce total churn by 20-40% depending on what percentage of your churn is involuntary.

Step 3: Understand Voluntary Churn

This is where most companies stall. They know their churn rate, they know the surface-level reasons (a dropdown during the cancel flow), but they do not know the stories.

Understanding the specific, contextual reasons behind cancellation requires going beyond checkboxes. Our guide on subscription cancellation reasons covers the five core reason categories and the dozens of sub-reasons beneath each one.

The most effective way to uncover these reasons is through actual conversations with departing customers. Whether that is manual CSM calls or AI exit interviews, the depth of insight from a conversation far exceeds what any survey captures.

With Quitlo, these conversations happen automatically. When a customer cancels, they are invited to a brief, opt-in voice conversation. The AI asks adaptive follow-up questions and delivers structured insights to your team's Slack channel. Instead of a spreadsheet of checkbox responses, you get a stream of specific, actionable stories.

Our churn reason analyzer can help you categorize and prioritize the reasons you uncover.

Step 4: Act on What You Learn

Understanding why customers leave is only valuable if it changes what you do. The most effective churn reduction programs follow a simple loop:

1. Collect cancellation reasons through conversations (not just surveys)
2. Categorize reasons by frequency and fixability
3. Prioritize the highest-impact, most-fixable issues
4. Ship changes that address those issues
5. Measure whether the specific cancellation reason decreases in subsequent months
6. Repeat

This loop turns churn from a metric you watch into a process you manage.

Step 5: Build for Retention

Beyond fixing churn causes, build product and process patterns that structurally improve retention:

• Stronger onboarding. Customers who reach their first "aha moment" within the first week churn at significantly lower rates.
• Usage monitoring. Identify accounts with declining engagement before they reach the cancellation point. Proactive outreach to at-risk accounts is cheaper than reactive churn recovery.
• Expansion paths. Customers who expand (add seats, upgrade tiers, adopt new features) churn at dramatically lower rates. Expansion is a retention mechanism, not just a growth mechanism.
• Community and switching costs. Products with collaborative features, shared data, or team-based workflows create natural switching costs that reduce churn.

The Benchmark Trap

A final caution: do not let benchmarks become ceilings.

Knowing that "5% monthly churn is average for SMB SaaS" is useful context. Using it as permission to stop improving is a mistake. Average churn rates reflect average effort. Companies that treat churn as a core metric and invest in understanding it consistently outperform their benchmark cohort.

The best SaaS companies do not compare their churn rate to industry averages and call it a day. They treat every cancellation as information, every departing customer as a teacher, and every churn reduction as compound growth.

Benchmarks tell you where you are. Understanding why customers leave tells you how to get better. Calculate your current rate with the churn rate calculator, then start capturing the reasons behind it. Quitlo's free trial gives you 50 surveys and 10 AI voice exit conversations, no credit card required. Within a week, you will have more actionable churn data than a year of benchmarks.