MRR & ARR Growth Simulator
Enter your starting MRR, monthly new MRR, churn rate, and expansion rate to simulate how your Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR) will grow over time. Includes net churn rate and a growth chart.
Typical monthly churn rate by customer segment
| Customer segment | Typical healthy monthly churn rate |
|---|---|
| Enterprise (large accounts, mostly annual contracts) | Under 0.5% |
| Mid-market (mid-sized companies) | 1% – 2% |
| SMB (small and mid-sized businesses) | 3% – 5% |
| Self-serve / consumer (mostly credit-card billing) | 5% – 7%+ |
Note: larger contracts with multi-stakeholder cancellation decisions tend to churn less. These figures vary widely by industry and product, so treat them only as a rough reference.
Tips
- Enter churn rate as the share of MRR lost to cancellations (revenue churn), not the raw percentage of cancelled accounts — this better reflects the impact of losing high-value customers.
- When your expansion rate exceeds your churn rate, you get "negative churn" — MRR keeps growing from existing customers alone, even with zero new business. The result panel flags this automatically. It is one of the most sought-after states for SaaS companies.
- Set new MRR to 0 and vary only the churn and expansion rates to isolate how healthy your existing customer base is, independent of new acquisition.
- The simulation period supports up to 60 months (5 years). For quarterly or annual planning, try comparing multiple periods such as 12 and 36 months for a more accurate picture.
Frequently Asked Questions
Side Note — The "leaky bucket" problem in SaaS
MRR growth in a SaaS business is often compared to filling a bucket with water. New MRR is the water flowing from the tap; churn is a hole in the bottom of the bucket. No matter how hard you turn up the tap, a big enough hole means the water never accumulates — and in the worst case, a company can keep signing new customers while its total MRR still shrinks, a pattern sometimes called a "death spiral." This is precisely why SaaS companies invest as heavily in retention (onboarding and customer success) as they do in new customer acquisition.
When expansion revenue from upsells and cross-sells outpaces churn, a company achieves "negative churn" — MRR keeps growing organically from the existing customer base alone, even with zero new sales. Usage-based and seat-based SaaS products like Slack or Datadog are well known for making this easier to achieve, since revenue naturally grows as usage spreads within an existing customer's organization.
MRR and ARR became standard metrics in investor materials largely because of the SaaS IPO and fundraising boom of the 2010s. A single year of total revenue says little about whether that revenue will repeat next month, but recurring revenue — by definition — keeps flowing as long as customers don't cancel, which is why it became the go-to measure of a subscription business's sustainability.