Gross churn is the percentage of recurring revenue or customers lost during a period, without subtracting any expansion or upsell revenue from remaining customers. It measures pure loss and shows how much existing business is disappearing through cancellations or downgrades, typically reported monthly or annually.
Types of Gross Churn
Gross churn is commonly tracked in two ways:
- Gross customer churn: the share of customers that cancel during the period
- Gross revenue churn: the share of recurring revenue lost from cancellations and downgrades during the period
Revenue churn is often more informative for B2B subscriptions because it reflects contract size and seat changes.
How Gross Churn Is Calculated
Common formulas include:
- Gross customer churn % = (Customers lost during period ÷ Customers at start of period) × 100
- Gross revenue churn % = (Churned ARR + Contraction ARR ÷ Starting ARR) × 100
Key points:
- Starting values are measured at the beginning of the period.
- Expansion ARR is not included in the calculation.
Why Gross Churn Matters
Gross churn is a direct indicator of retention problems:
- Highlights product and service issues: rising churn can signal poor fit, weak onboarding, or support gaps
- Improves forecasting: helps estimate how much new and expansion revenue is needed to grow
- Supports customer success prioritization: identifies segments with higher loss
- Clarifies unit economics: high churn reduces LTV and can worsen CAC payback
Gross churn is often paired with Net Revenue Retention (NRR) to show both losses and gains.
Frequently Asked Questions
What is the difference between gross churn and net churn?
Gross churn measures losses only. Net churn subtracts expansion from losses and can be lower or even negative if expansion is strong.
Does gross churn include downgrades?
Gross revenue churn typically includes both cancellations (churn) and downgrades (contraction). Definitions should be documented.
What is the difference between gross churn and GRR?
Gross Revenue Retention (GRR) is retention after churn and contraction. GRR = 100% − gross revenue churn.
Should gross churn be measured monthly or annually?
Both are used. Monthly is useful for fast feedback, while annual is useful for long-term planning. The time period must be stated.
What data is needed to calculate gross churn accurately?
Clean subscription and billing records, clear account hierarchies, and consistent rules for cancellations, downgrades, pauses, and credits.
