Churn rate benchmarks: how high is too high?

What churn rate is normal for a subscription business? The 2019 numbers, the 2026 numbers, and why the famous 5% rule only fits enterprise software.

First published 2019-04-18Updated 2026-11-06

Short answer (2026): Small, low-priced SaaS products commonly lose 2% to 6% of their customers every month, and the cheaper the plan, the higher the churn. B2B SaaS companies above $1M in annual revenue keep a median of 84% to 91% of their revenue each year before upsells, which works out to roughly 0.8% to 1.5% revenue churn a month. A churn rate of “5% to 7% a year” is realistic only for enterprise contracts.

Everyone asks how much churn is too much, and the honest answer is “it depends”. That answer doesn’t help anyone set a target, so this page collects the benchmarks that exist, explains why they disagree, and tells you which ones to compare yourself against.

Some churn is unavoidable. Cards fail, companies run out of cash, people stop needing the product. The question is whether your losses are in the normal range for a business like yours.

The 5% myth

The most quoted churn “benchmark” says an acceptable SaaS churn rate is 5% to 7% a year. It comes from a 2013 Sixteen Ventures post about acceptable churn, one of the first widely read pieces on the topic, and it has been repeated as an industry norm ever since.

Do the math and it falls apart for most companies. 5% a year is about 0.4% a month. Very few SMB or consumer subscription products get anywhere near that. It is a reasonable goal for software sold to large companies on annual contracts. It is not a benchmark for everyone else.

What the data showed in 2019

When I first published this page in April 2019, the best public data came from Baremetrics, an analytics tool for SaaS companies. Its benchmarks pooled live data from more than 800 small and mid-sized SaaS businesses. Averaging its customer cohorts by revenue per account gave a monthly customer churn rate of about 7.5%, roughly 61% a year.

A few Baremetrics customers also published their dashboards. In April 2019 they showed:

These were successful, growing companies, and they were losing about half their customers every year.

Surveys of larger companies told a different story. The 2016 Pacific Crest SaaS survey (Pacific Crest was later acquired by KeyBanc) covered 336 companies, 177 of which reported churn. Their median company had $5M in revenue, 50 employees and a $25,000 average contract. Their median annual churn was 10%, under 1% a month. In Totango’s 2016 SaaS metrics report, where about half the companies had more than $10M in revenue, 64% reported annual revenue churn under 10%, and 19% were above 15%. Cobloom’s 2017 meta-analysis of churn studies is a good summary of these older surveys, several of which are no longer online.

So in 2019 the picture was: under 1% a month for enterprise-focused companies, 5% to 8% a month for small-ticket SaaS.

What the data shows in 2026

The shape hasn’t changed. Newer reports mostly measure revenue retention instead of customer churn, which makes them look better, but the gap between small and large customers is the same.

A few notes on reading this table:

• Gross revenue retention is the share of last year’s revenue you still have, ignoring upsells. 91% means you lost 9% of revenue to cancellations and downgrades. That is about 0.8% a month. 84% is about 1.4% a month.
• Net revenue retention adds expansion revenue back in. Above 100% means upsells outweighed losses.
• SaaS Capital’s charts leave out companies under $1M in annual revenue, and its survey covered more than 1,000 companies in early 2025. Aleph and Benchmarkit used full-year 2025 data from 342 companies. Neither tells you much about a $20/month tool with 500 customers. ChartMogul’s figures by price point are closer to that world.

The 2026 numbers repeat the 2019 lesson. Cheap plans, monthly billing and self-serve sales churn more. Big contracts, annual billing and sales-led deals churn less.

Why the benchmarks disagree

Who is in the sample. Investor surveys skew toward funded B2B companies with sales teams. Billing and analytics tools see thousands of small self-serve businesses. Same metric, different populations.

Which churn they mean. Customer churn counts accounts. Revenue churn counts money. Gross revenue churn ignores upsells, net revenue churn includes them. A company can lose 4% of its customers a month and still report net revenue retention above 100% if the customers who stay keep paying more.

How essential the product is. Tools tied directly to revenue or daily operations, like billing, payroll or a CRM, are painful to replace. Nice-to-have marketing and productivity tools are easy to cancel when budgets tighten.

Who publishes. Companies with good retention talk about it. Companies with bad retention usually don’t, and public companies pick the retention metric that flatters them. Any benchmark built from voluntary reporting is probably optimistic.

How to use these numbers

1. Compare yourself to companies at your price point. If your average customer pays $30 a month, a 91% gross retention benchmark from companies with $50K contracts tells you nothing.
2. Separate voluntary and involuntary churn. Failed payments are a large share of churn for small-ticket products, and they are the cheapest to fix with card updaters, retries and dunning emails.
3. Watch the trend, not the absolute number. Newer customer cohorts should churn less than older ones as the product, onboarding and targeting improve. If they don’t, that matters more than any benchmark.
4. Track net revenue retention too. If expansion revenue from existing customers is larger than what you lose, you can grow even while customers leave. It is a fragile position, though: it depends on a minority of growing accounts.

Sources

1. Sixteen Ventures, "SaaS Churn Rate: What's Acceptable?", 2013. sixteenventures.com
2. Baremetrics benchmarks and public dashboards for Buffer, Hubstaff and ConvertKit, figures as of April 2019. baremetrics.com
3. Cobloom, "Churn rate: how high is too high? A meta-analysis of churn studies", 2017, the source for the Pacific Crest and Totango figures above. cobloom.com
4. ChartMogul, "What Is a Good Customer Churn Rate?", 2022-02-23. chartmogul.com
5. SaaS Capital, "2025 SaaS Retention Benchmarks for Private B2B Companies", 2025-09-18. saas-capital.com
6. Aleph and Benchmarkit, "2026 SaaS and AI Performance Benchmarks", 2026-06-01: gross revenue retention and net revenue retention.