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The revenue you replace before you grow at all

Churn sets a floor under how fast you can grow, because every month starts with a hole to fill. This shows what a change in monthly churn does to average customer lifetime, to lifetime value, and to the new revenue you have to add simply to stand still.

Last reviewed 27 August 2026

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Result

Revenue you replace every month

$1,600

4.0% of $40,000 MRR, before you grow at all

Average customer lifetime

25.0 months

40.0 months at your target churn

Current churn against target churn

Current churn against target churn
MeasureAt 4.0%At 2.5%Change
Average customer lifetime25.0 months40.0 months+15.0 months
Lifetime value on gross profit$4,000$6,400+$2,400
MRR lost each month$1,600$1,000-$600
Revenue to replace in a year$19,200$12,000-$7,200
Net growth after replacement8.5%10.0%+1.5 points

About 32% of the new MRR you win each month goes to replacing churn rather than growing. Moving churn to 2.5% hands $600 a month back to growth without selling anything new.

How this works

What the numbers mean.

  • 01Average customer lifetime is one divided by the monthly churn rate, expressed in months. At four percent monthly churn the average account stays twenty five months.
  • 02Lifetime value multiplies that lifetime by monthly gross profit rather than monthly revenue, so the figure is money you actually keep.
  • 03The treadmill figure is current MRR multiplied by the churn rate. It is the revenue you have to win back every month before a single dollar of growth shows up in the total, and it grows as you grow.

Assumptions and limits

  • The one over churn formula assumes a constant rate. Real churn is front loaded, so this overstates lifetime for companies with less than a year of cohort data.
  • Revenue churn here is gross, not net. If you have meaningful expansion revenue, your net revenue retention is a better headline number than anything on this page.
  • Halving churn is a product and onboarding problem more often than a marketing one. This tool sizes the prize, it does not tell you where the leak is.

Questions about this tool

Why does churn matter more as we grow?
Because the treadmill is a percentage of a growing base. Four percent of forty thousand is sixteen hundred dollars a month. Four percent of four hundred thousand is sixteen thousand. The rate stays the same and the absolute number you have to replace grows tenfold, which is why churn that felt survivable at seed becomes the whole problem at Series A.
What counts as acceptable monthly churn?
It depends heavily on who you sell to, and any single number quoted as a standard is worth distrusting. Self-serve products serving small businesses churn far harder than annual enterprise contracts. The useful comparison is against your own trend across cohorts, not against a figure from someone else's business.
Should I fix churn or add more new business?
Look at what share of your new MRR is going to replacement. Above roughly half, adding new business is filling a bucket with a hole in it and the acquisition cost is being spent twice. Below that, growth is usually the better use of attention.
Does this account for expansion revenue?
No, deliberately. Expansion can mask churn in the headline number while the underlying retention problem continues, and separating the two is the point of this tool. If you want the combined figure, look at net revenue retention, which nets expansion against churn.

Related

This tool is free and there is nothing to sign up for. If you would rather have the work done than calculate it, that is what Zway does.

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