Net Churn Calculation: How to Measure and Manage Churn in SaaS

Why Figuring Out Net Churn Is Important in SaaS

Let’s say you have a successful SaaS business that gets new users every month. It looks like the business is growing, but every time a new customer signs up, another one cancels. This is how things are for many SaaS businesses; churn is what stops growth in its tracks.

For every 5% rise in customer retention, Bain & Company found that profits go up by 25% to 95%. This shows how important it is to understand Net Churn Calculation. Gross churn shows how many customers are leaving, but net churn shows how much money your company is making from new customers. This gives you a more true picture of its financial health.

This article will explain what Net Churn Calculation is, why it’s important, and how you can make the most of it to grow your SaaS business in a way that lasts.

How do you figure out Net Churn?

Net Churn Calculation is an important SaaS metric that takes into account both new users and customers who leave (churn). This gives companies a more accurate picture of how much of their income they are keeping.

The formula to figure out net churn

The standard way to figure out net churn is:

If you divide the amount of money you lost from churn by the amount of money you made from new customers, you get the net churn rate.

The total amount of money that is lost when customers quit or downgrade their subscriptions.

Expansion Revenue: Extra money made from current users by upselling, cross-selling, or upgrading them.

Amount of money made at the beginning of the period: The base income, which doesn’t take into account turnover or growth.

For Example

Let’s say that your SaaS business makes $100,000 in sales at the beginning of the month.

During the month:

You lose $10,000 because people leave.

More sales bring in $5,000 for you.

Your net churn rate would be $10,000 – $5,000 / $100,000, which equals 5%.

If your net churn is negative, it means that your growth income is higher than your customer losses. This is a good sign for your business.

How to Keep Net Churn Low in SaaS

Stopping cancellations isn’t the only way to lower churn; you also need to make sure that expansion income is maximised. How to do it:

1. Make the onboarding process better for customers

First impressions are important. Wyzowl says that 63% of customers say onboarding affects their choice to join. When you sign people up, make sure that the process helps them see value quickly. Take a look at: interactive walkthroughs

Personalised welcome emails

Account managers who only work with important people

2. Keep an eye on customer health scores

Figure out which customers are likely to leave by using data-driven ideas. Health numbers for customers can keep track of:

• Adoption of features
• Support the number of tickets
• Levels of engagement
• Customer success tracking tools from HubSpot can help you find customers who are likely to leave soon.

3. Offer add-ons and upsells

Getting people to improve is the best way to stop people from leaving. List the features that paid users love.

Customers who interact with you a lot but are on cheaper plans

There are chances to add ons that give more value.

4. Make customer service and engagement better

A HubSpot study found that 80% of people would switch brands if they had bad customer service. Make sure that your support team is aggressive, quick to respond, and able to solve problems before they get worse.

5. Get customer feedback and act on it

Feedback loops and surveys help you figure out why people leave. To find pain points, use Net Promoter Score (NPS) polls and churn exit interviews.

• What Net Churn Does to SaaS Growth
• If the Net Churn Rate is high, it could mean:
• Not enough product-market fit
• Bad experience for the customer
• Not enough chances to sell more

A negative net churn rate (where expansion revenue exceeds churned revenue) means your SaaS business is growing even without new customer acquisitions.

There are different Net Churn Benchmarks for SaaS, but KeyBanc Capital Markets says:

• 0–5% Net Churn Rate: Excellent (SaaS leaders like HubSpot and Salesforce aim for this range)
• 5–10% Net Churn Rate: Manageable, but room for improvement
• >10% Net Churn Rate: Worrying; needs action right away

How HubSpot Helps Manage Net Churn Calculation

Managing churn requires data-driven insights, and HubSpot provides the tools to analyze and optimize customer retention strategies. With HubSpot’s analytics, you can:

• Track customer health scores
• Automate retention workflows
• Identify upsell opportunities
• Monitor churn trends in real-time

At TAYB, we specialize in API development for HubSpot, integrating custom retention dashboards and automation to help SaaS businesses maximize customer lifetime value. Our technology consultancy ensures your CRM is optimized for churn reduction and revenue expansion.

Want to see how HubSpot can transform your churn strategy? Book a free HubSpot demo/chat with Ale, our specialist, and take control of your customer retention today!

Drop us a line here, and let’s understand how we can help you.