← Guides · November 8, 2026
How One Point of Churn Changes Your MRR in Two Years
Start with $20,000 MRR, 60 new customers a month at $50 ARPA, and 1% monthly expansion. Only churn changes:
| Monthly churn | MRR after 12 months | MRR after 24 months |
|---|---|---|
| 4% | ≈ $44,500 | ≈ $61,500 |
| 3% | — | ≈ $69,900 |
One point less churn adds roughly $8,400 of MRR by month 24, and the gap keeps widening.
Why it compounds
Every month you lose a percentage of the base, not a fixed number. A bigger base loses more customers in absolute terms, so high churn puts a ceiling on growth. With 4% churn, 1% expansion and $3,000 of new MRR per month, that ceiling is near $100,000 even if you never slow your sales.
Where to look first
- Cancellations in the first 90 days. Usually an onboarding problem.
- Failed payments. Retry logic and card-updater emails recover revenue with no sales effort.
- Annual plans. Offering a discount for annual billing converts monthly churn into one renewal decision per year.
See what one point is worth for your business in the calculator.