In these pandemic times when economies are tumbling down and the whole world is going through recession nothing is normal anymore, but I will give you what is acceptable. In line with my experience, Bessemer Venture Partners says an “acceptable” SaaS churn rate is in the 5 – 7% range ANNUALLY, depending upon whether you measure customers or revenue. And BVP’s assertion is backed up by Pacific Crest in their Private SaaS Company Survey Results that show roughly 70% of SaaS companies in their survey had annual churn in the < 10% range, with 75% of those at 5% or under. The way I read the results of Pacific Crest’s survey is that 30% of SaaS providers surveyed have an unacceptable level of churn. Now, just so we are on the same page, 5% – 7% Annual churn – the good churn rate – translates to 0.42 – 0.58% monthly churn. This means companies with “acceptable” churn, lose only about 1 out of every 200 customers (or dollars) per month.
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