Gross churn rate is the percentage of customers (or revenue) you lose in a period, ignoring any new customers or expansion. The formula is Lost Customers ÷ Starting Customers × 100. Unlike net churn, it never counts gains — making it a pure measure of how much you're losing through the bottom of the bucket.
What Is Gross Churn Rate?
Picture your customers as water in a bucket with a hole. Gross churn rate measures how much you lose through that hole — regardless of how much new water you pour in from the tap. It strips out new and expansion revenue to show pure loss.
Gross Churn Rate Formula
Gross Churn Rate = (Lost Customers ÷ Customers at Start) × 100New customers don't affect it
Worked example
A SaaS company starts January with 500 customers, loses 25, and gains 40:
(25 ÷ 500) × 100 = 5%The 40 new customers are ignored
Healthy Gross Churn Benchmarks
| Rating | Annual | Monthly |
|---|---|---|
| Excellent | < 5% | < 0.42% |
| Good | 5–7% | 0.42–0.58% |
| Concerning | > 10% | > 0.83% |
These vary by industry, customer type (B2B vs B2C), price point, and contract length. (For perspective: 10% monthly churn means ~72% of customers gone within a year.)
Gross Churn vs Net Churn
| Metric | What it counts |
|---|---|
| Gross churn | All lost customers/revenue — losses only |
| Net churn | Losses minus expansion from existing customers |
Example: lose $1,000 MRR but existing customers add $300 in upgrades → gross churn = $1,000, net churn = $700. Net churn can even go negative; gross churn never does.
How to Improve Gross Churn
Watch for early warning signs — declining usage, lower engagement, more support tickets, missed payments — then act: monitor usage patterns, engage before problems escalate, gather exit feedback, and improve onboarding. Annual contracts (0.5–1.5% monthly churn) typically beat monthly plans (3–7%).
Gross Churn Rate FAQ
How do you calculate gross churn rate?
Divide customers lost by customers at the start of the period, then multiply by 100: (Lost ÷ Starting) × 100. Losing 25 of 500 customers = 5% gross churn.
What's the difference between gross churn and net churn?
Gross churn counts only losses. Net churn subtracts expansion revenue from existing customers, so it's lower and can even be negative. Gross churn is always positive.
What is a good gross churn rate?
For SaaS, under 5% annual (≈0.42% monthly) is excellent; 5–7% is good; above 10% annual is concerning. Enterprise and annual-contract businesses tend to run lower.
Does gross churn include new customers?
No. Gross churn measures only customers (or revenue) lost — new sign-ups and expansion are deliberately excluded so it reflects pure retention of the existing base.
