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SaaS churn

What is SaaS churn?

SaaS churn refers to the rate at which customers stop subscribing to a Software-as-a-Service (SaaS) product over a given period. This could be due to subscription cancellations, non-renewals, or downgrades. It's a vital metric in understanding the health of a SaaS business, as high churn rates can indicate problems with customer satisfaction or product-market fit.

In more detail, churn is usually calculated as a percentage. If you start the month with 100 customers and 5 of them cancel, your monthly churn rate would be 5%. Churn can be 'customer churn' (the percentage of customers lost) or 'revenue churn' (the percentage of revenue lost). It's important to keep an eye on both types. High churn rates are a common reason why SaaS businesses fail to grow or even go out of business - even with strong sales, they're just replacing lost customers rather than adding new ones.

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