## What is gross churn?

Gross churn is the total percentage of revenue lost in a given time period. It includes revenue lost from cancellations & downgrades.

## The difference between gross churn & other types of churn

Gross churn shows you the total percentage of revenue lost, period. In comparison:

- Net churn first subtracts expansion revenue
- Customer churn tells you the total percentage of customers lost (regardless of value)

Gross churn is the clearest way to measure whether or not a company is a) attracting the right customers, and b) delivering enough value to keep them.

Net churn is the clearest way to figure out what total revenue movements you should expect from your existing customer base.

Gross & net churn can both include voluntary and involuntary churn, so it’s worth checking to find out what you’re dealing with. Involuntary churn occurs when payments fail, rather than an intentional cancellation or downgrade.

Note: when using gross churn, negative churn is impossible (the minimum is 0%).

## How to calculate gross churn

To calculate gross churn, take the total amount of MRR churned this month, and divide by the total starting MRR for the month. Multiply by 100.

Here’s the formula:

**Gross Churn = (Churned MRR This Month / Starting MRR This Month) * 100**

And here’s an example.

You’re a SaaS company starting the month with $100k MRR. During the month, you experience:

- 4 customer cancellations worth $1k MRR each (= $4k)
- 12 customers downgrading plans, losing $500 MRR each (=$6k)

The total lost revenue is $10k MRR.

($10k / $100k) * 100 = 10% gross churn rate.

## Gross churn FAQs

### 1. What’s the difference between gross churn & net churn?

Gross churn is the total percentage of lost revenue. Net churn first subtracts expansion revenue to show the total revenue movement (up or down) from existing customers. With net churn, negative churn is possible (e.g. -2% churn means expansions outweighed cancellations & downgrades).

### 2. What’s the difference between gross churn and customer churn?

Customer churn reports on the total number of lost customers. It doesn’t consider the MRR value of those customers, while gross churn is the inverse (reflects only the value, not the number of customers).