Churned Monthly Recurring Revenue (Churned MRR) refers to the amount of recurring revenue a business loses in a given month due to subscription cancellations or customers downgrading to lower-priced plans. It reflects the downside of revenue performance and is critical for understanding retention challenges and revenue leakage.
Step 1: Identify all customers who canceled their subscriptions or downgraded to a lower-tier plan during the month.
Step 2: For each of those customers, determine the amount of recurring revenue that was lost as a result of the cancellation or downgrade.
Step 3: Add up the monthly recurring revenue lost from all these customers to get the total Churned MRR.
Step 4: Use the formula: Churned MRR = Σ (Monthly Revenue Lost from Cancellations + Downgrades)
Example: If five customers were paying $200 per month and all canceled or downgraded, your Churned MRR would be:
5 × $200 = $1,000
Churned MRR = Σ (Monthly Revenue Lost from Cancellations + Downgrades)
Only recurring revenue losses are included. One-time purchases or usage-based fees are excluded since they are not part of predictable monthly income.
A healthy SaaS company typically aims to keep monthly revenue churn under 5%. For enterprise SaaS or high-retention segments, churn as low as 1% to 2% is considered excellent. Elevated churn levels can point to challenges such as poor product-market alignment, low customer satisfaction, ineffective onboarding, or gaps in support.
Measures the net change in recurring revenue each month by combining income from new customers, plan upgrades, and subtracting losses from cancellations or downgrades.
Reflects the percentage of subscribers who cancel their plans within a given time frame, often aligning with shifts in churned revenue.
Represents the total subscription income collected monthly, before accounting for any revenue reduction from churn.
Estimates how much revenue a customer will bring in over time, which can decline when churn rates increase.
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It highlights how much predictable income is lost each month and signals whether retention efforts are working or need improvement.
Yes. Any reduction in monthly recurring revenue caused by customers switching to lower-priced plans is included.
Customer churn counts the number of customers lost, while Churned MRR measures the dollar value of the lost subscriptions.
Common causes include poor onboarding, lack of product value, pricing issues, inadequate customer support, or strong competitor offerings.
Yes. Growth in new and expansion MRR can outweigh churned revenue, resulting in positive Net New MRR.