This post is by Tomasz Tunguz from Tomasz Tunguz
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If a typical SaaS business loses about 2 to 3% of their customers each month to churn, the business must grow by at least 27% to 43% annually to maintain the same revenue. The idea written as an equation: Revenue Growth = Customers x Avg. Contract Value x (Growth Rate - Churn Rate) At the beginning of a SaaS startups' life, when the company generates $1M in annual revenue, churn in absolute dollar terms is small, about $300k for the year.