Logo Churn vs. Revenue Churn: One Matters More

You lost 10 customers this month.

Your logo churn rate: 5% (10 out of 200 customers).

But those 10 customers represented 50% of your revenue.

Your revenue churn rate: 25%.

Same fact (10 customers left). Completely different problem.

This is the difference between logo churn (customer accounts) and revenue churn (actual money).

Defining Logo Churn and Revenue Churn

Logo Churn = % of customer accounts that closed

You had 200 customers at the start of the month. 10 cancelled. Logo churn = 5%.

This metric counts each customer the same whether they paid $100/month or $100,000/month.

Revenue Churn (also called MRR Churn or ARR Churn) = % of monthly recurring revenue that was lost

You had $500,000 MRR at the start of the month. Churn = $125,000. Revenue churn = 25%.

This metric weighs each customer by their financial value.

Why They’re Different

Businesses are rarely evenly distributed by revenue.

Instead, you usually have:

A few large customers generating lots of revenue
Many small customers generating a little revenue

Example:

Top 10 customers: $400,000 MRR (80% of revenue)
Middle 50 customers: $80,000 MRR (16% of revenue)
Bottom 140 customers: $20,000 MRR (4% of revenue)

If you lose:

Option A: 1 top customer ($50,000) + 5 small customers ($5,000) = 6 customers lost

Logo churn: 6/200 = 3%
Revenue churn: $55,000 / $500,000 = 11%

Option B: 10 small customers ($10,000) = 10 customers lost

Logo churn: 10/200 = 5%
Revenue churn: $10,000 / $500,000 = 2%

Option A has lower logo churn (3% vs. 5%) but higher revenue churn (11% vs. 2%).

Which is worse? Option A, by far. Losing $55,000 in revenue is catastrophic. Losing 6 customers is… okay.

If you only track logo churn, you’d think Option B is worse.

The Danger of Only Tracking Logo Churn

Many SaaS companies report logo churn to investors because it looks better.

“We had 3% logo churn.”

Sounds good. But if your top 10 customers are 80% of revenue, and you lose one, you’ve actually lost 12.5% of revenue.

3% logo churn hides that disaster.

This is why sophisticated investors ask for both metrics. They know the difference.

Negative Churn (Expansion Revenue)

Here’s where it gets interesting.

If some customers expand (upgrade plans, add seats, etc.), they generate additional revenue.

If expansion revenue exceeds churn revenue, you have negative churn.

Example:

Revenue at start of month: $500,000 MRR
Churn (customers who left): $50,000
Expansion (customers who upgraded): $80,000
Net revenue change: -$50,000 + $80,000 = +$30,000
Ending MRR: $530,000

Your revenue actually grew despite losing customers.

This is the holy grail of SaaS metrics. It means:

Your existing customers love you (they’re expanding)
Even when people leave, others expand enough to compensate
You can slow new customer acquisition and still grow (because existing customers are expanding)

Negative churn = exceptional business.

Calculating Churn Correctly

The most common mistake is calculating churn wrong.

Wrong calculation:

Churn = Customers lost / Total customers at end of month

This is wrong because you’re dividing by “customers at end” which has already excluded the churned customers.

Right calculation:

Churn = Customers lost / Total customers at start of month

Example:

Start: 100 customers
Churned: 5
Acquired: 10
End: 105 customers

Wrong calculation: 5 / 105 = 4.8% Right calculation: 5 / 100 = 5%

The difference seems small, but compounds. Over many months, wrong calculation makes churn look better than it is.

Revenue Churn Calculation

For revenue churn, you track MRR (monthly recurring revenue) or ARR (annual recurring revenue).

Start of month: $500k MRR

Churn (customers who cancelled): -$50k
Expansion (upgrades/additions): +$30k
New (new customers): +$40k
End of month: $520k MRR

Revenue churn = $50k / $500k = 10%

Net revenue retention (NRR) = ($500k - $50k + $30k) / $500k = 96%

NRR is more useful than raw churn because it includes expansion. A 96% NRR means you’re retaining 96% of revenue from your customer base (accounting for churn and expansion).

(See “Net Revenue Retention” article for deeper dive.)

When Logo Churn Matters More

Logo churn is more useful when:

Your customers are evenly distributed in revenue (no huge whales)
You’re tracking brand health and customer relationships
You want to understand how many customer relationships you’re losing

Example: A B2C app where most users pay the same subscription fee.

Logo churn is a good proxy for financial health.

When Revenue Churn Matters More

Revenue churn is more useful when:

Your customers have wildly different values (some pay 10x more than others)
You’re evaluating financial sustainability
You’re explaining the business to investors or the board

Example: B2B SaaS where customers range from $100/month (SMB) to $100,000/month (Enterprise).

A single Enterprise customer leaving can destroy your month.

Revenue churn tells the true story.

The Hybrid Approach: Track Both

Best practice is to track both and understand the dynamics.

Example:

Metric	Value	Assessment
Logo Churn	3%	Good (losing few customers)
Revenue Churn	12%	Bad (losing significant revenue)
Expansion Revenue	$60k	Good (customers upgrading)
Net Revenue Retention	96%	Acceptable (losing revenue but expanding customers help)

Interpretation:

You’re losing some customers (3% logo churn is normal)
But the customers you’re losing are big ones (12% revenue churn is high)
Good news: Existing customers are expanding ($60k expansion)
Net result: Revenue down but stabilizing (96% NRR)

Action:

Investigate why big customers are churning (product fit? price? support?)
Double down on expansion (your growth engine)
Accept some logo churn if revenue is stable and expanding

Cohort Churn

Both logo and revenue churn vary by cohort (when customers were acquired).

Logo churn by acquisition month:

January cohort: 4% monthly churn
February cohort: 5% monthly churn
March cohort: 3% monthly churn

Revenue churn by acquisition month:

January cohort: 8% monthly churn
February cohort: 7% monthly churn
March cohort: 2% monthly churn

March cohort is much better (lower churn in both metrics).

Maybe you improved onboarding in March. Or you changed the type of customer you acquired.

Tracking both reveals when and where you improved.

Seasonal Churn

Churn varies seasonally.

December might have lower churn (holiday retention effect, people hold onto software).

January might have higher churn (post-holiday budget cuts, new year cleanups).

When analyzing “did churn improve?” always compare same month, year-over-year.

Don’t compare January to December. They’re different seasons.

The Real Metric: Payback Period

Beyond churn rates, what matters is how long it takes to recoup the cost of acquiring a customer.

This is where logo churn and revenue churn come together.

CAC payback period = CAC / (Monthly gross profit per customer)

Example:

CAC: $1,000
Customer revenue: $100/month
Gross margin: 80%
Gross profit: $80/month
Payback period: $1,000 / $80 = 12.5 months

If customer churn is 5% monthly:

Most customers stick around 20 months (100% / 5% = 20)
This gives you 7.5 months of profit after payback (20 - 12.5)

If customer churn increases to 10% monthly:

Most customers stick around 10 months
This gives you negative 2.5 months of profit (10 - 12.5)
You never fully recoup CAC. The customer leaves before they become profitable.

Higher churn directly impacts whether your unit economics work.

The Takeaway

Logo churn counts customers. Revenue churn counts money.

In uneven revenue distribution (typical B2B SaaS), revenue churn is more important.

Track both. Compare to benchmarks. Understand which segments are churning.

Focus on reducing churn for your high-value customers. Losing a $100k/year customer is a crisis. Losing a $1k/year customer is a rounding error.

We help you calculate and track both logo and revenue churn, identify which customer segments are at risk, and build retention strategies focused on your most valuable customers.