Gross MRR churn shows revenue lost to cancellations and downgrades. Net MRR churn subtracts expansion from those losses. Neither is total MRR or net new MRR.
Last updated: 2026-04-01
Tracks MRR lost to cancellations and downgrades from the starting customer base. Expansion does not offset these losses. The annual survey figures below come from SaaS Capital (2026), for bootstrapped B2B SaaS companies with $3M-$20M ARR.
Useful for seeing revenue losses before expansion. If gross churn is 10% and net churn is 2%, expansion offsets 8 percentage points of loss.
Subtracts expansion MRR from cancellations and downgrades in the starting customer base. New customer revenue is excluded.
Useful for tracking whether recurring revenue from the existing customer base is growing or shrinking.
Gross MRR churn % = (Churn MRR + Contraction MRR) / Starting MRR x 100Use losses from the starting customer base and a positive starting MRR. Gross revenue retention is 100% minus this rate.
Net MRR churn % = (Churn + Contraction - Expansion) / Starting MRR x 100Negative net churn means expansion exceeds losses. State how you treat reactivation; only include it here when it belongs to the starting cohort.
| Criteria | Gross MRR Churn | Net MRR Churn |
|---|---|---|
| Includes expansion | No | Yes |
| Can be negative | No (always >= 0) | Yes, when expansion exceeds losses |
| Best for | Customer health and product retention | Business state, forecasting, board reporting |
| Hides what | The upside from expansion strategy | The size of the churn problem |
| Pairs with | Gross retention rate | Net retention rate (NRR) |
| Annual survey example (SaaS Capital, 2026) | Median 9% gross revenue churn (91% GRR) | Median -3% net revenue churn (103% NRR) |
| First metric to track | Track alongside net churn | Track alongside gross churn |
| LTV input | Revenue losses inform cohort forecasts | Do not divide by zero or negative net churn for LTV |
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Use your own inputs to explore the calculations and compare results.
Both help explain retention. Gross churn shows losses before expansion; net churn shows whether the existing revenue base grew or shrank. Report the period, cohort, and calculation rules with each.
Compare businesses with similar customers and contracts over the same period. SaaS Capital's 2026 survey of bootstrapped B2B SaaS companies with $3M-$20M ARR reported median annual GRR of 91% and NRR of 103%. Those correspond to 9% gross and -3% net annual revenue churn, not monthly targets.
Expansion from the starting customer base exceeded its cancellations and downgrades. Revenue from that base grew without new customers. Check gross churn too, because expansion can offset substantial losses.
New MRR comes from new customers. Expansion comes from upgrades or added seats. Contraction is a downgrade or seat reduction. Churn is a full cancellation. Reactivation is a former customer returning. Net new MRR adds new, expansion, and reactivation, then subtracts churn and contraction.
Track both from the same data. Gross churn helps diagnose losses; net churn shows how expansion offsets them. Neither rate alone explains why customers changed their spending.