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Metric: MRR Churn Rate

The MRR Churn Rate chart reports the rate at which you are losing MRR through downgrades and cancellations (Gross MRR churn rate) or offset by upgrades (Net MRR churn rate). 

How is it calculated?

Gross MRR churn rate

Gross MRR Churn rate shows the revenue churn rate without being offset by the impact of upgrades.

The Standard (B2B) setting 

Formula:

(SUM of Churn & Contraction MRR) / MRR at start of period

Example: 

If you had $100 MRR at the beginning of the month, and during the month you lost $10 to churn MRR, and $10 to contraction MRR, while one customer increased their MRR by $10, your Gross MRR churn rate would be 20%: ($10 + $10) / $100.

The Shopify (B2C) setting

Formula:


SUM((MRR at the start of the day) - (MRR at the end of the day) / (MRR at the start of the day))

Example:


If we had $100 MRR at the start of the day, and at the end of the day we had $95 MRR, our Gross MRR Churn rate would be 5%: (100 - 95) / 100.

Net MRR churn rate

Net MRR churn rate reports the net of upgrades, and paints a more positive picture than the Gross MRR churn rate.

The Standard (B2B) setting

Formula:


(SUM of Churn & Contraction MRR - SUM of Expansion & Reactivation MRR) / MRR at start of period.

Example:


If you had $100 MRR at the beginning of the month, and during the month you lost $10 to churn MRR, and $10 to contraction MRR, while one customer increased their MRR by $10, your Net MRR churn rate would be 10%: ( ($10 + $10) - ($10 + $0) ) / $100.

The Shopify (B2C) setting

Formula:


SUM((MRR at the start of the day) - (MRR at the end of the day) / (MRR at the start of the day))

Example:


If we had $100 MRR at the start of the day, and at the end of the day we had $95 MRR, our Gross MRR Churn rate would be 5%: (100 - 95) / 100.

There is no hard rule on how to calculate MRR churn. At ChartMogul we provide two options. There is no reason why a B2B or B2C company couldn't use either formula but these are just our general recommendations. Ultimately you should decide which one fits your business better.

What analysis can be gained?

This graph is useful if you want to see the amount of MRR lost each month to churn and contractions. You can segment this graph using the segmentation tools. For example, you could see the MRR Churn Rate for customers who responded negatively to a Net Promotor Score (NPS) survey.