The normal churn rate for a B2B SaaS company can vary depending on factors such as industry, target market, customer satisfaction, and product offering. However, a commonly cited benchmark for SaaS churn rates is around 5% - 7% annually for established companies, though it can be higher for newer or smaller companies.
To calculate the churn rate, you would typically use the formula:
Churn Rate=Number of Customers LostTotal Number of Customers at the Beginning of the Period×100%Churn Rate=Total Number of Customers at the Beginning of the PeriodNumber of Customers Lost×100%
Given that you have an average monthly revenue of $850 per customer, if you're experiencing a 10% churn rate of total monthly sales, it means that 10% of your customers are churning each month. To put this into perspective:
If you have 100 customers:
Monthly Revenue: 100 customers * $850 = $85,000
Churned Revenue: $85,000 * 10% = $8,500
So, you're losing $8,500 in revenue each month due to churn.
Whether a 10% churn rate is high or low depends on various factors, including industry benchmarks, the stage of your company (early-stage companies may have higher churn rates as they iterate on product-market fit), and your company's growth goals. Generally, a 10% monthly churn rate would be considered high for most B2B SaaS companies, as it would lead to significant revenue loss over time if sustained. It's important to monitor churn closely and implement strategies to reduce it, such as improving product quality, enhancing customer support, and implementing retention initiatives.
