SaaS · 16 Oct 2026
SaaS metrics in plain English: MRR, churn and LTV
Four numbers tell you most of what you need to know about a subscription business.
Key takeaways
- Always check whether a churn benchmark is monthly or annual. Mixing them up is the most common mistake in churn comparisons.
- Recurly's 2025 data, as summarised by Orb, puts average B2B SaaS churn at 3.5%, of which 0.8 points is involuntary churn from failed payments.
- Small monthly rates compound: 3% monthly churn loses about 31% of customers in a year.
Churn is the share of customers, or revenue, you lose over a period. It decides how fast a subscription business can grow, because every new customer first has to replace one who left.
Monthly vs annual churn: the most common mix-up
Benchmarks seem to disagree mostly because some quote monthly churn and others annual churn. Convert monthly churn to annual churn with 1 − (1 − monthly churn)¹². A few examples:
- 1% a month is about 11.4% a year.
- 3% a month is about 30.6% a year.
- 5% a month is about 46% a year.
What recent benchmarks say
Recurly's 2025 churn data, as summarised by Orb, puts average B2B SaaS churn at 3.5%, split into 2.6% voluntary churn and 0.8% involuntary churn. Vena describes a good churn rate for B2B SaaS as generally below 1% a month. Products sold to small businesses usually churn faster than products sold to large companies, so compare yourself with companies that sell to the same kind of customer.
Voluntary vs involuntary churn
Voluntary churn is a customer choosing to cancel. Involuntary churn is a customer lost because a payment failed, often an expired card. Involuntary churn is usually the quickest to fix: retry failed payments, email customers before their card expires and make it easy to update payment details.
Why churn decides customer lifetime value
Customer lifetime value is roughly monthly gross profit per customer divided by monthly churn. At $60 a month, an 80% margin and 3% churn, LTV is $1,600. Cut churn to 2% and LTV rises to $2,400 with no price change. Try your own numbers in the lifetime value calculator and track recurring revenue with the MRR and ARR calculator.
Five ways to reduce churn
- Get new customers to their first result quickly. Early drop-off is often an onboarding problem.
- Offer annual plans. Customers who pay yearly have a full year before they can leave. Price them with the annual plan discount calculator.
- Recover failed payments with automatic retries and card-expiry reminders.
- Ask every cancelling customer why they are leaving, and act on the top reason.
- Watch usage. Accounts that stop logging in are likely to cancel soon.
Key terms
- Customer churn
- The share of customers who cancel in a period.
- Revenue churn
- The share of recurring revenue lost in a period, including downgrades.
- Net revenue retention (NRR)
- Revenue kept from existing customers after churn, downgrades and upgrades. Above 100% means existing customers grow on their own.
- Involuntary churn
- Customers lost because a payment failed rather than because they chose to leave.