The benchmark by segment
Monthly logo churn of 3-7% is normal for SMB SaaS, and getting under 3% is good. Mid-market products should hold 1-2% monthly, and enterprise SaaS should stay under 1%. The gap is structural: small businesses fail, change tools on a whim, and cut spending fast, while enterprise buyers sign annual contracts and face real switching costs. So compare yourself to companies selling to the same buyer, not to SaaS as a whole.
Annualize the math honestly
Monthly churn compounds, so small numbers turn ugly over a year. At 3% monthly churn you keep 97% of customers each month, and 0.97 to the twelfth power is 0.69, so you lose 31% of your customers in a year. At 5% monthly you lose 46% annually, and at 7% you lose 58%. If a number sounds fine monthly, run the annual math before deciding it is fine.
Logo churn vs revenue churn
Logo churn counts customers lost; revenue churn counts dollars lost. They diverge whenever accounts are different sizes: losing ten $10 customers hurts less than losing one $1,000 customer, even though logo churn says the opposite. Healthy SaaS often shows revenue churn below logo churn because bigger accounts stick around longer. Track both, and if you only track one, make it revenue churn, because that is the one that pays your bills.
When this number lies
Churn is unreliable in your first year because cohorts are tiny: two cancellations out of 30 customers is 6.7% churn, and that tells you almost nothing. Annual contracts hide churn for up to twelve months, so a young annual-plan business can show near-zero churn right up until the first renewal wave. Counting trial cancellations as churn inflates the number; counting paused accounts as retained deflates it. Trust the number only after a few hundred customers and at least one full renewal cycle.