Churn Rate is the 2nd most important number in a SaaS business. I talked about the Number 1 SaaS number in this article, go read it first. There are a lot of misconception of the term Churn Rate. Let’s define what a meaningful churn rate should look like.
1. It should show how much money the business is making.
2. It should show how much money the business is losing.
3. It should show how many customer is adding for the period.
4. It should show how many customer is cancelling for the period.
5. It should be normalized so that I can compare between 2 periods.