Metrics & Performance
Churn
The rate at which customers cancel or fail to renew their subscriptions. High churn is a critical warning sign for SaaS businesses.
Churn measures how many customers (or how much revenue) a company loses over a given period. Monthly churn rate = customers lost during the month / total customers at the start of the month. For SaaS businesses, annual revenue churn above 10% is concerning; below 5% is healthy. Net revenue retention (NRR) is the inverse — it measures total revenue retained from existing customers including expansions. If NRR > 100%, revenue from existing customers is growing even without any new customer acquisition. High churn is one of the most common reasons VCs pass on SaaS investments — it signals that customers aren't getting lasting value from the product.