SaaS Benchmarks

Report
Growth Trends & SaaS Benchmarks From
Studying Over 2,100 SaaS Businesses

2023
Executive Summary

Welcome to the 2nd edition of the ChartMogul SaaS Benchmarks Report.

In this report, we analyze anonymized and aggregated data from over 2,100 SaaS The report is full of insights — there’s a lot for you to explore! If you stumble upon
businesses to bring you the latest SaaS benchmarks and growth trends. Four insights anything that is unclear or just want to discuss some of the takeaways do reach out.
stood out in our research:
The 2023 SaaS Benchmarks Report would not have been possible without the

SaaS growth in 2022 was the slowest it has been in years. support of my colleagues. A special thanks to Bianca, George, Peter, Rachel,
Thomas, and Toni for making this report happen.
After a phenomenal 2020 and 2021, 2022 was much slower. The top quartile of
SaaS business with ARR between $1 and $30 million grew 62.1% in 2022 (vs.
93.4% in 2020 and 78.9% in 2021). There is some cause for optimism. Growth for
companies with ARR over $1m accelerated in Q1 2023.

Retention was a key driver of growth.

Sincerely,
The last 12 months were the toughest for retention they have ever been. Sid Jain
Companies that were able to retain their customers in this tough climate grew at Senior Research Analyst,
least 1.8x faster than their peers. ChartMogul

Companies are now relying more on expansion revenue to drive growth. Sid is a Senior Research Analyst at ChartMogul. He is
The proportion of ARR gained from expansion has increased from 28.8% in 2020 to passionate about SaaS and data and authors The SaaS
32.3% now. In comparison, the proportion of ARR gained from the new business Roundup which has over 23,000 subscribers. His research
has fallen from 62.0% to 57.9%. is often featured in leading industry journals such as
TechCrunch and FastCompany. Before joining
After 5-6 quarters of lackluster growth, new business ARR is finally ticking up. ChartMogul, Sid spent seven years at J.P.Morgan. He is
Some green shoots are starting to emerge. Businesses with ARR over $1m saw an based in London, UK.
uptick in new business ARR growth in the first quarter of 2023. It’s hard to say if
this is an outlier or part of a wider trend.
Contents

CHAPTER 01 CHAPTER 04
Growth Trends 4 Churn Benchmarks 40

Is growth faster or slower in 2023? What is a good net and customer churn rate?
Is new business higher or lower than usual? What percentage of businesses have negative churn?
Are there any signs of stabilization in the SaaS market? How is churn different for B2B vs B2C businesses?
Is expansion lower or higher than usual?
CHAPTER 05

CHAPTER 02 ARR Movements Benchmarks 52

Growth Benchmarks 18 What percentage of revenue added comes from expansion?
What is a good growth rate in 2023? How much revenue do you lose to contraction and churn?
How does growth correlate to ARR? Does reactivation even matter?
Do B2B businesses grow faster than B2C?
Methodology 58
CHAPTER 03
Retention Benchmarks 26 Glossary 58

What is a good net and customer retention rate?

About ChartMogul 59
Is net retention higher at higher ARRs?
What percentage of businesses have net retention over 100%?
How does net retention differ for B2B vs B2C businesses?

3
CHAPTER 1

Growth Trends
Is growth faster or slower in 2023?

Is new business higher or lower than usual?

Are there any signs of stabilization in the SaaS market?

Is expansion lower or higher than usual?

SaaS growth in 2022 was the slowest it has been in three years
After a phenomenal 2020 and 2021, SaaS growth in 2022 was much slower. The top quartile of SaaS business with ARR
between $1 and $30 million grew 62.1% in 2022 (vs. 93.4% in 2020 and 78.9% in 2021).

ARR growth rates for companies with $1-30m ARR

100% Top Quartile

93.4% Median
Bottom Quartile
78.9%
75%

64.7%
62.1%

50%
42.5%
37.9%

27.9% 27.0%
25%
18.5%
15.7%
7.8% 6.1%
0%
2020 2021 2022 2023 LTM*

Year *Last 12 months ending Mar ‘23

5
The slowdown in growth rates was even more pronounced for early-stage startups (<$1m ARR)
The top quartile of SaaS business with ARR less than $1 million grew 139.1% in the last 12 months. This is only half the pace at
which similar-sized businesses were growing in 2020 or 2021.

ARR growth rates for companies with <$1m ARR

280% Top Quartile

259.5% Median
240%
228.5% Bottom Quartile

200%

169.4%
160%
139.1%
120%

80%
72.7% 67.8%
46.0%
40% 36.1%
17.4% 14.3%
0% 1.3% -3.4%

-40%
2020 2021 2022 2023 LTM*

Year *Last 12 months ending Mar ‘23

6
Even the best-in-class SaaS businesses saw growth rates halve compared to the highs of 2020

Top decile of ARR growth for companies with $1-30m ARR Top decile of ARR growth rates for companies with <$1m ARR

240% Top Decile 1200% Top Decile

221.2% 1114%

200% 1000% 893%

170.9%

160% 800%

133.6%
118.0%
120% 600%
584%
549%

80% 400%

40% 200%

0% 0%
2020 2021 2022 2023 LTM* 2020 2021 2022 2023 LTM*

Year *Last 12 months ending Mar ‘23 Year *Last 12 months ending Mar ‘23

7
Public SaaS companies experienced a slowdown in growth too
Companies of all sizes experienced a slowdown. The top decile of public SaaS companies grew 48% in 2022 (vs. 66% in 2021)
while the top quartile of companies grew 39% in 2022 (vs. 54% in 2021).

Top Decile Top Quartile Median

66%

54%
48%

39%
34%

26%

2021 2022 2021 2022 2021 2022

Data Source: Clouded Judgement by Jamin Ball 8

There are signs of stabilization. Growth for companies with ARR over $1m accelerated in Q1 2023
After 7 straight quarters of slowing growth rates, there are signs of stabilization. The top quartile of SaaS companies with ARR
over $1m saw growth accelerate slightly in the first quarter of this year. It’s too early to say if this is a temporary stabilization,
an outlier, or part of a wider trend.

Year-over-year growth in ARR for companies with $1-30m ARR

120%
2020 2021 2022 2023

100% 97%
93% 93%
90%
85%
78% 77% 79% 78%
80%
72% 70%
65%
62% Top Quartile
60%

46% 47%
41% 42% 49%
37% 37% 38%
40% 35%
32% 30% 28% 27%
Median
0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2020 2021 2022 2023
Quarter / Year

9
Companies with ARR over $1m also saw an uptick in new business ARR
Late 2020 and the first half of 2021 were the golden periods of new business for most SaaS businesses. The journey from
there on has been rough. More recently some green shoots are starting to emerge. Businesses with over $1m in ARR are
seeing an acceleration in new business ARR in Q1 2023.

Year-over-year growth in new business ARR for companies with $1-30m ARR

140%
2020 2021 2022 2023

120%
108% 107%
102%
97%
100%
84%
80%

58% 60% Top Quartile

60% 51%
49%
42% 45% 45%
37% 39% 38%
40% 32%
26%
23%
20% 10% 11% 9%
3% 4% 4% Median
1% 1%
0%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2020 2021 2022 2023
Quarter / Year

10
But for companies with ARR less than $1m, growth continues to falter into 2023

Year-over-year growth in ARR for companies <$1m ARR

340%
2020 2021 2022 2023

300%
278%
258% 260%
260% 246% 244% 244% 241%
228%
221%
220% 208%
197%

180% 169%

139%
140% Top Quartile

100%
73% 74% 75% 72%
67% 67% 68%
63% 62%
54% 48%
60% 46%
36%
Median
20%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2020 2021 2022 2023
Quarter / Year

11
New business is also slow for early-stage SaaS startups (<$1m ARR)
The median early-stage startup saw flat year-over-year new business ARR over the past 4 quarters.

Year-over-year growth in new business ARR for companies with <$1m ARR

275%
2020 2021 2022 2023
250%

225%
205%
195% 196% 192%
200% 183%
175%
149%
150%
122% 124%
125% 108%
100% 100% 100%
100% Top Quartile
79%
75%
48% 43%
50% 38% 38%
27%
22% 20%
25% 14%
8% 3%
-1% -3% 0%
0% Median
-25%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2020 2021 2022 2023
Quarter / Year

12
In today’s market average is losing - or more accurately, median is losing. There is a

huge difference between being in the top quartile and being on the median. It’s the

same difference between having a very strong business and a very meh business. We

certainly saw this when I was a VC. We had around 2,000 companies in our portfolio,

but all our fund returns came from the top 5%. Things might have looked better for

median companies during the free-spending boom of 2020, but that was the anomaly.

2023 is a lot more typical of long-term economic conditions

Matt Lerner, ex-PayPal, 500 Startups VC, Founder at Startup Core Strengths
Given the landscape, companies are relying more on expansion revenue to drive growth
The proportion of ARR gained from new business activities has come down from 62.0% of ARR gained in 2020 to 57.9% now. In
contrast, the portion of ARR gained from expansion has increased from 28.8% in 2020 to 32.3% now. The reactivation
component has remained roughly stable at 10%.

Split of ARR gained for companies with $1-30m of ARR

65% 62.0%
59.8%
60% 57.6% 57.9%
New Biz ARR as
% of total ARR
55%
Added
50%

45%

40%

35% 32.5% 32.3%

31.2% Expansion ARR
28.8% as % of total ARR
30%
Added
25%
2020 2021 2022 2023 LTM*

Year *Last 12 months ending Mar ‘23

14
Companies with best-in-class retention grew at least 1.8x faster than their peers
Retention is the key to growth in today’s market. On average, SaaS businesses with a net retention rate of over 100% grew
49.5% in the last 12 months. In comparison, businesses with net retention in the 60-80% range grew by just 9.2%. Note how
some SaaS businesses with a retention of less than 60% are able to grow at such fast speeds. This is because they are
fast-growing B2C companies, which usually have low retention rates but huge markets.

Year-over-year growth in ARR by net revenue retention

100% Top Quartile

86.6% Median
85.0%
75% Bottom Quartile

57.7%
50% 49.5%

30.8% 27.8%
25% 27.3%
24.5%
13.1%
9.2%
0% -1.9% -3.7%

-25%
<60% <60-80% <80-100% >100%

Net Retention Rate Note: Excludes companies with <$1m ARR

15
Retention was harder than it has ever been. More than half of SaaS businesses saw
lower retention rates in 2022
2022 was a challenging year for most SaaS businesses. A tough macroeconomic environment meant customers reassessed
and cut their SaaS spend. This is in sharp contrast to 2021 which saw almost 70% of businesses having a higher retention rate
in 2021 when compared to previous year.

% of companies that had a higher net retention vs previous year

100% 2021
90% 2022

80%
73%
69% 69% 70%
70%
63%
58%
60% 56%
46% 48%
50%
42% 41%
40% 37%

30%

20%

10%

0%
<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Range

16
There are signs of a venture spring. Valuations in SaaS have ticked up from recent lows.

Median round sizes mostly stabilized. But these green shoots were overwhelmed by the

decline in total rounds across all stages.

Peter Walker, Head of Insights, Carta

CHAPTER 2

Growth Benchmarks
What is a good growth rate in 2023?

How does growth correlate to ARR?

Do B2B businesses grow faster than B2C?

Compare your growth metrics to the market

Growth benchmarks by ARR range

<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Growth Rate (over a year)

Best-in-class / Top decile 663% 224% 183% 119% 78% 99%

Good / Top quartile 153% 97% 70% 69% 45% 49%

Ok / Median 37% 32% 27% 27% 29% 32%

Can be better / Bottom quartile -5% 4% 7% 6% 6% 11%

Growth benchmarks by ARPA per month range

<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARR Growth Rate (over a year)

Best-in-class / Top decile 279% 198% 148% 134% 115% 139%

Good / Top quartile 70% 81% 66% 69% 49% 77%

Ok / Median 24% 31% 27% 29% 31% 38%

Can be better / Bottom quartile 2% 4% 8% 6% 7% 21%

19
Even though efficiency is a key factor in whether a startup is more or less exciting for

investors, growth is the clear #1 consideration. If you’re at around $8-15 million ARR,

you need to grow roughly 2x year-over-year to get investors excited. If you’re below

$8 million ARR, you have to grow even faster to get investors to jump out of their

seats. That doesn’t mean that you can’t raise at all if you’re growing slower, but it will

be more difficult.

Christoph Janz, Managing Partner, Point Nine Capital

Growth is faster in the early stages. As companies mature, the growth rate slows down
What is a good growth rate for a SaaS startup depends on the stage of your business. Growth is fast in the early stages of
business and slows down as businesses mature. The top quartile of business in the $1-8m ARR range grows 70% annually. At
scale ($8-30m ARR), the top quartile of businesses grow around 45% annually.

Top quartile of ARR growth rates (YoY) by ARR range

180% Top Quartile

160% 153.0%

140%

120%

100% 96.7%

80% 69.9% 69.0%

60%
44.6% 48.6%
40%

20%

0%
<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Range

21
Best-in-class SaaS businesses double their revenue each year
The top decile of SaaS businesses with ARR in the range of $1-3m grow at 183% annually. Those in the $3-8m ARR segment,
grow at 119% per annum.

Top decile of ARR growth rates (YoY) by ARR range

700% 663% Top Decile

600%

500%

400%

300%
224%
200% 183%

119%
99%
100% 78%

0%
<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Range

22
Dispersion in growth is high initially but stabilizes as companies mature
The fastest-growing companies outgrow others multiple times over. VCs often focus on funding the top decile of companies
that will double or triple revenue each year.

Compound monthly ARR growth rate (%) by ARR range

Every 10th percentile going down (90th to 10th)

20%

15%

10%

90th percentile

5%

0%

10th percentile

-5%
<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Range

23
Companies with a higher average revenue per account (ARPA) tend to grow slightly
faster on average
The median company with a higher ARPA grows faster than the median company with a lower ARPA. The correlation is weak
but is still present.

Median ARR growth rates (YoY) by ARPA range

45% Median

40% 38.1%

35%
30.5% 31.4%
30% 29.0%
27.3%

25% 23.8%

20%

15%

10%

5%

0%
<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARPA per month range

24
Talking about explosive growth, B2C growth trumps B2B growth by a margin
The top decile of B2C companies (usually companies with an ARPA less than <$25/month) grow much faster than the top
decile of B2B companies (ARPA >$25/month). This in part is because of large market sizes and virality.

Best-in-class ARR growth rate (YoY) by ARPA range

300% Top Decile

279%

250%

198%
200%

148%
150% 137%
134%
116%

100%

50%

0%
<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARPA per month range

25
CHAPTER 3

Retention Benchmarks
What is a good net and customer retention rate?

Is net retention higher at higher ARRs?

What percentage of businesses have net retention over 100%?

How does net retention differ for B2B vs. B2C companies?
 Retention Overview and Formulas
Retention is a measure of how well you are able to retain your existing customer base. A high net revenue retention rate can help you
achieve better growth, build a more capital-efficient business, and even get higher valuations from investors. In SaaS, you can measure
retention in three ways:

Retention can be measured over any time period, but it is common to measure it
01 Customer Retention — also known as logo retention, measures the over 12 months. Analyzing retention over 12 months works well for both annual
percentage of customers retained over a period of time. For example; if you and monthly subscriptions. It allows for the full customer lifecycle, including
have 10 customers on day one, what percentage of those customers do adoption and expansion. And also nullifies any impact from seasonality which can
you still have 12 months later. cause short-term fluctuations.
Retention should always be calculated on a cohort basis i.e. over a specific group
of customers. Here are the formulas to calculate yearly retention numbers:

02 Net Revenue Retention (NRR) — also known as net dollar retention,

measures the percentage of revenue retained over a period of time. For # of paying customers left from paying customers one year ago
Customer
example; if you have a total monthly recurring revenue (MRR) of $100k on Retention
=
# of paying customers one year ago
day one, what percentage of that revenue do you still have 12 months later.

MRR today from paying customers one year ago

Net Revenue
Retention (NRR)
=
MRR from the same group of customers a year ago
03 Gross Revenue Retention (GRR) — also known as gross dollar retention,
measures the percentage of revenue retained, excluding expansions, over a
MRR today from paying customers one year ago
period of time. For example; if you have a total monthly recurring revenue Gross (excluding any expansion)
(MRR) of $100k on day one, excluding any contribution from expansions, Revenue =
what percentage of that revenue do you still have 12 months later. Retention (GRR) MRR from the same group of customers a year ago

27
 Companies in a particular ARPA range share many similarities.
ARPA is the average revenue per account i.e. average monthly recurring revenue across all your
customers. Generally, B2C companies have a lower ARPA (<$25/month) compared to B2B companies
(>$25/month). The length of the sales cycle, the tenure of your contract, discounting, onboarding, the
type of customer support, and even retention strategies all depend on your ARPA. Hence, it’s good to
benchmark your SaaS business based on your ARPA band, in addition to your ARR band
Compare your retention metrics to the market (ARR range)

Retention benchmarks by ARR range

<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

Net Retention (over a year)

Best-in-class / Top decile 95% 102% 108% 109% 109% 110%

Good / Top quartile 78% 87% 94% 95% 100% 100%

Ok / Median 56% 70% 77% 81% 83% 87%

Can be better / Bottom quartile 35% 50% 57% 61% 67% 60%

Gross Retention (over a year)

Best-in-class / Top decile 86% 85% 89% 85% 88% 87%

Good / Top quartile 70% 76% 80% 81% 81% 82%

Ok / Median 53% 62% 68% 68% 72% 69%

Can be better / Bottom quartile 33% 45% 51% 54% 57% 56%

Customer Retention (over a year)

Best-in-class / Top decile 84% 85% 86% 86% 85% 86%

Good / Top quartile 71% 77% 79% 80% 82% 81%

Ok / Median 53% 65% 68% 67% 72% 66%

Can be better / Bottom quartile 33% 50% 54% 56% 62% 59%

29
Compare your retention metrics to the market (ARPA range)

Retention benchmarks by ARPA per month range

<$25 $25-100 $100-250 $250-500 $500-1k >$1k

Net Retention (over a year)

Best-in-class / Top decile 82% 101% 110% 112% 120% 126%

Good / Top quartile 68% 91% 95% 101% 104% 110%

Ok / Median 54% 73% 86% 87% 91% 100%

Can be better / Bottom quartile 38% 58% 69% 75% 80% 78%

Gross Retention (over a year)

Best-in-class / Top decile 73% 83% 86% 90% 94% 94%

Good / Top quartile 63% 76% 82% 84% 86% 91%

Ok / Median 50% 64% 72% 74% 79% 82%

Can be better / Bottom quartile 35% 51% 58% 64% 73% 68%

Customer Retention (over a year)

Best-in-class / Top decile 75% 84% 87% 90% 93% 92%

Good / Top quartile 65% 75% 82% 81% 85% 86%

Ok / Median 54% 66% 72% 73% 77% 79%

Can be better / Bottom quartile 38% 53% 58% 64% 68% 65%

30
In reality, for every B2B SaaS business retention becomes the biggest growth driver in a

way. So it is worth focussing on retention really from day one, perhaps even before you

actually have any meaningful retention data to look at.

Nick Franklin, Founder & CEO, ChartMogul

SaaS businesses at scale should target a net retention rate over 100%
What is a good net retention rate differs by the stage of business. In the pre-product market fit stage, net retention is usually poor.
As SaaS businesses grow and find product-market fit, net retention improves. Finally, as companies reach scale, and become
category leaders, net retention often exceeds 100%. When benchmarking, always keep the stage of your business in mind.

Net revenue retention rate by ARR range

110% Top Quartile

Median
100% 101%
95% Bottom Quartile
94%
90%
87% 87%
83%
81%
78% 77%

70% 70%
67%
61% 60%
56% 57%
50% 50%

35%
30%
<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Range

32
Best-in-class net revenue retention is at the 110% mark
A net retention rate of over 100% indicates a strong product market fit and showcases your ability to compound revenue from your
existing customer base. Businesses with net retention over 100% usually have a combination of a high gross retention + strong
expansion loop.

Best-in-class net revenue retention by ARR range

120% Top Decile

110%
110% 109% 109%
108%

102%

100%
95%

90%

80%
<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Range

33
The definition of "good" net retention is dramatically different between B2B and B2C SaaS
The top quartile of companies with an ARPA over $1k/month hit 110%+ net retention, while the top quartile of companies of B2C
businesses i.e. those with an ARPA less than $25/month only hit 70%. When judging whether a SaaS company has good gross
retention, make sure you keep their ARPA in mind.

Net revenue retention rate by ARPA range

120% Top Quartile

110%
Median
105% 104% Bottom Quartile
101% 100%
95%
90% 91% 92%
86% 87%
80%
78%
75% 75%
73%
68% 70%

60%
58%
54%

45%
38%
30%
<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARPA per month range

34
It’s hard for B2C businesses to have high net retention rates
In B2C (companies with ARPA <$25/month), churn is higher and expansion is lower. Churn is higher because of a lot of knee-jerk
buying by the individual customers and expansion is lower because there are fewer upselling and cross-selling opportunities. Only
2% of SaaS businesses with an ARPA less than $25/month have net retention rates over 100%. In contrast, in B2B SaaS, it’s table
stakes for you to have net retention near or over 100%. Nearly half of SaaS businesses with an ARPA over $1k/month have net
retention over 100%.

B2B companies tend to enjoy better net retention

50% 49%
% of companies
with net retention
> 100%
40%
33%
30%
30%

20%
20%

11%
10%

2%
0%
<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARPA per month range

35
Best-in-class net revenue retention for B2B SaaS is in the 110-125% range
At higher ARPAs, companies are able to upsell and cross-sell their products much more. Based on our analysis, 40% of the new
revenue for SaaS businesses with an ARPA of more than $1k/month comes from expansion. This expansion revenue drives up net
retention. A lot of B2B SaaS businesses employ the classic “land and expand” strategy.

Best-in-class net revenue retention by ARPA range

140% Top Decile

126%
120%
120%
112%
110%

101%
100%

82%
80%

60%
<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARPA per month range

36
Customer retention is low in the starting stages of a business. As you grow and find
product-market fit, retention improves
What is a good net retention rate differs by the stage of business. In the pre-product market fit stage, net retention is usually poor.
As SaaS businesses grow and find product-market fit, net retention improves. Finally, as companies reach scale, and become
category leaders, net retention often exceeds 100%. When benchmarking, always keep the stage of your business in mind.

Customer retention rate by ARR range

90% Top Quartile

Median
82% 81%
79% 80% Bottom Quartile
77%

71% 72%
70%
68% 67% 66%
65%
62%
59%
56%
53% 54%
50% 50%

33%
30%
<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Range

37
The definition of "good" customer retention depends a lot on who you sell to
(consumers, SMB, or enterprise)
B2B businesses often have a higher customer retention rate compared to B2C businesses. Companies with ARPA over
$1k/month have a top quartile customer retention rate of 85.8%. In contrast, companies with an ARPA of less than $25/month
have a top-quartile customer retention rate of just 64.7%. This is expected. As B2B companies have larger deal sizes, longer
sales cycles, and generally more informed decision-making, customer retention is higher.

Customer retention rate (%) by ARPA range

100% Top Quartile

Median
90%
85% 86% Bottom Quartile
82% 81%
80% 79%
77%
75%
73% 73%
70%
66% 66%
65% 65%
64%
60%
58%
54% 53%
50%

40%
38%

30%
<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARPA per month range

38
Best-in-class customer retention for B2B SaaS stands at 90%
Best-in-class customer retention rate depends on your ARPA. For businesses with an ARPA of less than $25/month, it is at 75%. As
you move upmarket, best–in–class customer retention increases. For businesses with an ARPA of over $1k/month, it is at 91.9%.

Best-in-class customer retention (%) by ARPA range

100% Top Decile

93% 92%
90%
90%
87%

84%

80%

73%

70%

60%
<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARPA per month range

39
CHAPTER 4

Churn Benchmarks
What is a good net and customer churn rate?

What percentage of businesses have negative churn?

How is churn different for B2B vs. B2C businesses?

34
Churn overview and formulas
Churn measures the rate at which customers or revenue is leaving your SaaS business. You can measure churn in three ways:

# of customers who churned in the period*

Customer Churn Rate =
# of customers at the start of the period

*excluding any customers who both joined and churned in the same period

Churn + Contraction MRR lost in the period

Gross MRR Churn Rate =
MRR at start of period

(Churn + Contraction MRR lost in the period) - (Expansion + Reactivation MRR gained in the period)
Net MRR Churn Rate =
MRR at start of period

Churn can be measured over any period of time, but it’s best measured on a monthly basis. In the early stages, churn gives you
quick feedback which other metrics seldom do. You can run tests on your platform, and then see feedback within the next few
days or months.

41
 Net churn rate can be negative.
If the MRR gained from existing customers (Expansion + Reactivation) exceeds the MRR lost (Churn +
Contraction), the net MRR churn rate will be negative. Negative net MRR churn is akin to SaaS nirvana.
This is because, with each passing month, your existing subscriber base becomes more and more
valuable.
Compare your churn metrics to the market (ARR range)

Churn benchmarks by ARR range

<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

Net MRR Churn Rate (Monthly)

Best-in-class / Top decile 0.2% -0.4% -1.2% -0.8% -0.8% -1.1%

Good / Top quartile 2.4% 0.8% 0.3% 0.2% -0.1% -0.4%

Ok / Median 6.2% 3.1% 2.3% 1.6% 1.4% 1.8%

Can be better / Bottom quartile 12.3% 6.7% 5.5% 4.1% 3.1% 5.4%

Gross MRR Churn Rate (Monthly)

Best-in-class / Top decile 2.5% 2.0% 1.6% 2.0% 1.6% 1.5%

Good / Top quartile 4.8% 3.6% 3.0% 3.3% 2.8% 2.2%

Ok / Median 4.1% 5.7% 5.3% 5.3% 4.0% 5.8%

Can be better / Bottom quartile 16.5% 10.5% 9.0% 9.5% 8.0% 11.1%

Customer MRR Churn Rate (Monthly)

Best-in-class / Top decile 1.5% 1.4% 1.3% 1.3% 1.5% 1.3%

Good / Top quartile 3.2% 2.5% 2.2% 2.3% 2.0% 1.7%

Ok / Median 6.5% 4.1% 3.7% 3.8% 3.1% 4.1%

Can be better / Bottom quartile 11.6% 7.3% 6.9% 6.5% 5.6% 7.4%

43
Compare your churn metrics to the market (ARPA range)

Churn benchmarks by ARPA per month range

<$25 $25-100 $100-250 $250-500 $500-1k >$1k

Net MRR Churn Rate (Monthly)

Best-in-class / Top decile 1.3% -0.3% -1.2% -1.2% -1.9% -2.6%

Good / Top quartile 3.2% 0.8% 0.1% 0.4% -0.4% -0.8%

Ok / Median 6.0% 2.8% 1.3% 0.7% 0.4% 0.1%

Can be better / Bottom quartile 10.2% 5.7% 3.4% 2.5% 1.4% 1.4%

Gross MRR Churn Rate (Monthly)

Best-in-class / Top decile 3.3% 2.5% 2.0% 1.5% 0.9% 0.7%

Good / Top quartile 5.4% 3.7% 3.0% 2.2% 1.6% 1.1%

Ok / Median 8.2% 5.7% 4.8% 3.6% 2.4% 2.7%

Can be better / Bottom quartile 13.3% 10.3% 8.7% 5.7% 5.3% 6.0%

Customer MRR Churn Rate (Monthly)

Best-in-class / Top decile 2.5% 1.7% 1.4% 1.0% 0.9% 0.7%

Good / Top quartile 4.0% 2.8% 1.9% 1.9% 1.4% 1.1%

Ok / Median 6.1% 4.2% 3.1% 3.0% 2.2% 1.8%

Can be better / Bottom quartile 9.3% 7.4% 5.8% 4.7% 3.6% 3.5%

44
In analytics, it’s up to you and your team to agree on which metrics you want to track.

But the key is to track them consistently using the same definitions and analytics. It will

help you to notice any month-over-month or year-over-year changes and how your

product and marketing initiatives correlate to that.

Olga Berezovsky, Senior Manager, MyFitnessPal & Author, Data Analysis Journal
Churn is high in the initial stages. As you scale and hone in on your ICP, churn decreases.
SaaS businesses should target a negative net MRR churn rate
The monthly net MRR churn rate is higher in the initial stages of company building but decreases as the company grows. To be
considered among the best, you should have a net negative churn ( i.e. net MRR churn rate <0%).

Monthly net MRR churn rate (%) by ARR range

15% Bottom Quartile

Median
12.2% Top Quartile

10%

6.0% 6.6%
5.5% 5.3%
5%
4.0%
2.9% 2.9%
2.3% 2.2%
1.6% 1.6% 1.0%
0% 0.8% 0.3% 0.2% 0.0%
-0.5%

-5%
<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Range

46
40% of SaaS businesses with ARR in the $15-30m range have negative churn
How can your business achieve negative churn? By building a pricing model that has an expansion loop within it. This is the only
sustainable way to get to negative churn. No matter what you do, customers are always going to churn. You need to try to figure
out a way to expand revenue from those who stay.

Negative churn leaders by ARR range

40%
40% % of companies
with negative
churn

30%
26%

22%

20% 19%

15%

10% 9%

0%
<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Range

47
The average business with ARPA over $1k has negative churn
The higher the ARPA, the lower the monthly net MRR churn rate. This is because of lower gross churn and higher expansion
revenue at higher ARPAs

Monthly net MRR churn rate (%) by ARPA per month

12.5% Bottom Quartile

Median

10.0% 10.2% Top Quartile

7.5%

6.0%
5.7%
5.0%

3.2% 3.2%
2.8%
2.5% 2.5%

1.3% 1.5% 1.4%

0.7% 0.7% 0.4%
0% 0.1% 0.0%
-0.4% -0.3%
-0.8%

-2.5%
<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARPA per month range

48
47% of businesses with ARPA per month over $1k have a negative net MRR churn rate
At higher APRA ranges, expansion starts to drive a lot of revenue, which contributes to negative churn. The impact is so prominent
that at higher ARPA net negative churn is more of a norm than an exception. 47% of companies with ARPA more than $1k/month
have net negative churn.

Negative churn leaders by ARPA range

60% % of companies
with negative
churn
47%
45%

36%
34%

30%
24%

15% 13%

3%

0%
<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARPA per month range

49
As companies find product market fit and grow, the median customer churn rate initially
declines and then stabilizes at 3-4% per month
If you have managed to bring down your customer churn rate to 1-2% per month, you are already among the top 25% of all SaaS
companies. Instead of focusing on bringing down churn further, there may be more pressing things to tackle.

Monthly customer churn rate (%) by ARR range

15% Bottom Quartile

Median
Top Quartile
11.5%

10%

7.2% 7.3%
6.8%
6.4% 6.4%
5.8%
5%
4.1%
3.6% 3.8% 3.6%
3.2% 3.3%
2.5% 2.2% 2.3% 2.0% 1.7%

0%
<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Range

50
The higher the ARPA, the lower the customer churn rate
The best companies should target a customer churn rate of less than 2% per month. This goes down to <1% as your ARPA increases.

Monthly customer churn rate (%) by ARPA range

10.0% Bottom Quartile

9.3% Median
Top Quartile

7.5% 7.4%

6.1%
5.8%

5.0%
4.6%
4.2%
4.0%
3.6% 3.4%
3.1%
2.7% 2.8%
2.5%
2.3%
1.9% 1.9% 1.8%
1.3% 1.2%

0%
<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARPA per month range

51
CHAPTER 5

ARR Movement Benchmarks

What percentage of revenue added comes from expansion?

How much revenue do you lose to contraction and churn?

Does reactivation even matter?

ARR Movement Overview
Your ARR moves every day. It’s because of all the underlying dynamics of customers joining, upgrading, canceling, or downgrading.
You can break down your ARR movements into:

$3k
Reactivation
Previous active customers moving
back onto a paid plan.

$2k

Expansion
Increase existing customers, usually
from upgrades.
$1k

New Business
Leads converting to new customers.
$0
Churn
Customers cancelling active subscritions.
Contraction
$-1k
Decrease in MMR from exisiting
customers: e.g. from downgrades.

Breaking ARR into its component parts gives a useful insight into your business. For example, it’s helpful to know what proportion of
your ARR added comes from expansion vs. new business.

53
The higher the ARR, the higher the percentage of revenue that comes from expansion
New business ARR makes up for the largest portion of ARR added for the majority of companies. Once you are at scale, the
contribution of expansion starts to increase. 36% of revenue added for SaaS business with ARR in the range of $15-30m comes from
expansion. If you are not upselling or cross-selling to your existing customers you are missing out on key growth opportunities.

Split of ARR gained by ARR range

100%
14%
23%
30% Expansion as
9% 34% 36% 36%
80% a % of ARR
10% gained
10%
60% 10% 10% Reactivation
11%

40% 76%
67%
61% 56% 54% 54% New Business

20%

0%
<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Range

54
The higher the ARR, the higher the percentage of revenue that comes from expansion
A higher expansion contribution is great. It showcases your ability to upsell and cross-sell existing customers. But be aware that
if a majority of your new revenue comes through expansion it is a red flag. It is a sign that your primary market is saturating. Also,
note how reactivation is higher for B2C businesses (ARPA <$25/month). This is a result of discounting and well-run reactivation
campaigns in B2C businesses.

Split of ARR gained by ARPA range

100%
11%
29%
13% Expansion as
80% 38% 40% 40% 39%
a % of ARR
gained
11%
60% 5% Reactivation
10% 6% 6%

77%
40%

60% 53% 53% 56% New Business

53%
20%

0%
<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARPA per month range

55
Churn makes up for the bulk of the ARR lost but managing contraction becomes more
important as you scale
For companies with ARR over $1 million, churn accounts for roughly 70% of ARR lost while contraction accounts for 30% of ARR lost.

Split of ARR lost by ARR range

100%
15%
23%
28% 30% 31% 32%
80% Contraction
as a % of ARR
lost
60%

40% 85%
77% 72% 70% 69% 68% Churn

20%

0%
<$300k $300k-1m $1-3m $3-8m $8-15m $15-30m

ARR Range

56
Contraction accounts for 40% of ARR lost at higher ARPAs
Churn is the largest contributor of ARR lost at any ARPA range. But at higher ARPAs contraction starts to bite. It can be as high as
40% of all ARR lost.

Split of ARR lost by ARPA range

100%
9%
25%
80% 37% 37% 40%
41% Contraction
as a % of ARR
lost
60%

91%
40%
75% Churn
63% 63% 60%
59%

20%

0%
<$25 $25-100 $100-250 $250-500 $500-1k >$1k

ARPA per month range

57
Methodology
We analyzed anonymized and aggregated data from ChartMogul to calculate all aggregates. Unless stated otherwise, we
calculated aggregates over 12 months ending Mar ‘23. We only included companies that were active for the full 12 months.

All aggregates for ARPA per month ranges exclude companies less than $300k in ARR.

Glossary
ACV: Annual Contract Value
ARPA: Average Revenue per Account = (Total Revenue / Total # of customers)
ASP: Average Sale Price = (Total New Business MRR / Total # of customers acquired)
ARR: Annual Run Rate (MRR x 12)
B2B: Business to Business (usually ARPA >$25/month)
B2C: Business to Consumer (usually ARPA <$25/month)
GRR: Gross Retention Rate, also known as Gross Dollar Retention or just Gross Retention
MRR: Monthly Recurring Revenue
NRR: Net Retention Rate, also known as Net Dollar Retention or just Net Retention
New Biz: New Business
PMF: Product-Market Fit
SMB: Small and Medium Business
YOY: Year-over-Year
58
About ChartMogul
ChartMogul is a subscription analytics platform and a CRM that exists to help B2B SaaS companies succeed. Founded in 2014 by Nick Franklin,
ex-Zendesk, and backed by Point Nine, thousands of SaaS companies use ChartMogul today to identify their growth levers and deeply
understand the dynamics of their subscription business.

ChartMogul gives you live reporting on your ARR, LTV, Retention and Churn, with in-built tools for cohort analysis and segmentation.

The platform is built to fit seamlessly into your data stack; combining and normalizing subscription data from multiple sources to give you and
your team an accurate view of your business.

On top of this, ChartMogul is committed to providing in-depth and insightful research into trends, benchmarks and key topics affecting the B2B
SaaS industry. To keep on top of our latest releases as well as industry news, join 23,000 others by subscribing to the SaaS Roundup.

Learn More

Loved by 2,500+ SaaS businesses around the world

59