Your churn rate sets a hard limit on how big your SaaS can get. Find out where that ceiling is and what it takes to raise it.
Monthly recurring revenue from new customers, upgrades, and reactivations.
Percentage of MRR lost each month from cancellations and downgrades.
See how different churn rates affect your maximum MRR potential based on your current new MRR.
| Churn Rate | Max MRR | Monthly Churn $ | Status |
|---|
monthly churn
monthly churn
monthly churn
It's the point where churn catches up to growth. If you're adding $10K in new MRR each month and losing $10K to cancellations, you've hit your ceiling. Net growth goes to zero.
Knowing this number tells you whether your revenue target is even possible. If your max MRR is $500K and you're aiming for $1M ARR, something has to change first.
Max MRR = New MRR ÷ Churn Rate Example: $10,000 new MRR per month, 5% monthly churn:
Drop from 5% to 2.5% monthly churn and your max MRR doubles. Same sales team, same marketing spend. Just better retention.
2% churn vs 10% churn means a 5x difference in maximum revenue (with the exact same new MRR). This is why investors pay premiums for low-churn businesses.
Maximum MRR is the highest monthly recurring revenue your SaaS can reach with your current growth and churn rates. Once you hit this ceiling, every dollar you add equals the dollar you lose to churn. Growth flatlines.
Divide your new MRR by your churn rate. If you're adding $10K/month in new MRR with 5% churn, your max is $200K. At that point, 5% of $200K ($10K) churns out monthly - exactly what you're bringing in.
It depends on your market. Enterprise SaaS companies typically run 1-2% monthly churn. Mid-market sits around 2-3%. SMB-focused products often see 3-5%. Anything over 5% starts eating into your growth ceiling fast.
Either bring in more new MRR or reduce churn. Churn reduction usually has the bigger payoff. Dropping from 5% to 3% churn doubles your ceiling. <a href='/blog/saas-customer-onboarding' class='text-accent hover:underline'>Better onboarding</a>, faster support response, and tracking at-risk accounts all help.
It's roughly how long until you hit 90% of your maximum MRR, assuming nothing changes. If that number is small, you're approaching your ceiling fast and need to fix churn or grow acquisition to keep scaling.
Math. Cut your churn in half, you double your max MRR. A company with 2% churn has 5x the ceiling of one with 10% churn (same new MRR, completely different outcomes). Small churn improvements compound.
No. It's a warning sign, not a target. If you're getting close to your max, growth is about to stall. Healthy SaaS businesses stay well below their ceiling because they keep improving retention and acquisition.
Upsells and cross-sells count as new MRR in this calculation. If your expansion revenue exceeds cancellations (net negative churn), your maximum MRR becomes infinite. That's the goal.
Calculators are useful. Dashboards that update in real-time are better. See your actual MRR, churn rate, and revenue ceiling live.
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