Excel Tutorial Series: How To Calculate Revenue Churn Rate

Welcome back to Excel Tutorial Series. If you’ve been following along, you know how crucial it is to track your Monthly Recurring Revenue (MRR). Now, we’re going to tackle a metric that gives you a much more impactful view of your financial health: the Revenue Churn Rate, also known as MRR Churn Rate.

What is Revenue Churn Rate?

The Revenue Churn Rate measures the percentage of recurring revenue lost over a period. This loss comes from three main sources:

1. Cancellations: Customers who fully churned.
2. Contractions: Customers who moved from a high-priced plan to a lower-priced plan.
3. Discounts: Revenue lost by applying new, permanent discounts to existing customers.

The basic formula is:

1. Preparing your data

To calculate Churn Rate, you’ll need the following data:

• Month: e.g., 2025-02, 2025-03, etc.
• MRR (Start): Total MRR on the first day of the month.
• Churned MRR: Total MRR lost from cancellations, downgrades, and discounts during the month.

For example:

2. Calculating the Month-to-Month Revenue Churn Rate

In an empty column next to your data (let’s use D2), enter the following formula.

=C2/B2

Where

• C2 is the cell containing the Churned MRR (losses) for the month.
• B2 is the cell containing the MRR (Start) for the month.

Since the result will be a decimal (e.g., 0.5405), you need to format the cell as a percentage.

1. Select the cell D2.
2. Go to the Home tab in the Excel ribbon.
3. In the Number group, click the % button (or press Ctrl+Shift+%).
4. Increase the decimal places to one or two for better precision (e.g., 54.05%).

Finally, apply the formula to the other rows by clicking on the small square at the bottom right corner of cell D2 and dragging down to calculate the Revenue Churn Rate for all subsequent months.

Conclusion

The Revenue Churn Rate is an important metric for understanding the sustainability and scalability of your SaaS revenue stream.

For most B2B SaaS companies, the goal is often to keep Gross Revenue Churn (not including Expansion MRR) under 5% monthly (especially for smaller businesses), with top performers aiming for less than 1% monthly.

If your Revenue Churn Rate is high, it’s a direct signal that your product’s value proposition is not strong enough for the price or that your onboarding and retention strategies are failing.

Calculating it in Excel is simple, but the insight it provides is priceless. By prioritizing the reduction of this percentage, you are directly protecting and accelerating your MRR growth.

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