# Net MRR Churn Rate

Date created: Mar 22, 2018  •   Last updated: Jun 10, 2021

## What is Net MRR Churn Rate?

Net Monthly Recurring Revenue (MRR) Churn Rate is the percentage change in MRR due to expansions, cancellations and downgrades. A negative Net MRR Churn Rate occurs when expansions exceed downgrades and cancellations and is a strong positive indicator of company health. This metric is typically expressed as a monthly rate although it can also be an annual rate: Net Annual Recurring Revenue (ARR) Churn Rate.

Alternate names: Net \$ Churn Rate, Net Revenue Retention Rate

### Formula

ƒ Sum(downgraded MRR + cancelled MRR - expanded MRR) / (total MRR at the beginning of the month)

### How to calculate

Example A: A company’s MRR is \$50,000 with expansions of \$7,000 and downgrades and cancellations of \$10,000. The Net MRR Churn Rate is (\$10,000 - \$7,000) / \$50,000 = 6.0% Example B: A company’s MRR is \$100,000 with expansions of \$12,000 and downgrades and cancellations of \$7,000. The Net MRR Churn Rate is (\$12,000 - \$7,000) / \$100,000 = -5.0%

Net MRR Churn Rate

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### What is a good Net MRR Churn Rate benchmark?

The most successful companies have a 'negative' Net Churn Rate, meaning that expansions outweigh downgrades and cancellations (Net MRR Churn of 2% per month, or Net Revenue Retention of 102% per month)

Annual Net Revenue Retention by ACV

SaaS Capital, 2020

Annual Net Revenue Retention Rate by Target Customer

OpenView, Sep 2019

Annual Net Revenue Retention Rate by Target Customer Type

OpenView, 2019 (n=639)

Annual Net Retention Retention Rate by ARR

OpenView, Sep 2019

Annual Net Revenue Retention Rates

KeyBanc, 2018 (n=200)