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

Net MRR Churn Rate Formula

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

How to calculate Net MRR Churn Rate

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%

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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)

Net MRR Churn Rate benchmarks

Annual Net Revenue Retention by ACV

Annual Net Revenue Retention by ACV
SaaS Capital, 2020

Annual Net Revenue Retention Rate by Target Customer

Annual Net Revenue Retention Rate by Target Customer
OpenView, Sep 2019

Annual Net Revenue Retention Rate by Target Customer Type

Annual Net Revenue Retention Rate by Target Customer Type
OpenView, 2019 (n=639)

Annual Net Retention Retention Rate by ARR

Annual Net Retention Retention Rate by ARR
OpenView, Sep 2019

Annual Net Revenue Retention Rates

Annual Net Revenue Retention Rates
KeyBanc, 2018 (n=200)
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More about Net MRR Churn Rate

In contrast to Gross MRR Churn Rate, that looks only at downgrades and cancellations, Net MRR Churn Rate reports expansions, downgrades and cancellations.

Net MRR Churn Rate is a critical KPI for subscription-based companies because the cost of retaining a customer is always less than attaining a new one. Additionally, an existing customer is worth future revenue.

Net MRR Churn Rate is calculated by subtracting the expansions from the cancels and downgrades for the month and dividing the result by the total MRR at the start of the month.