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Revenue Churn Rate vs Gross and Net Revenue Churn
Ask three people for a company's revenue churn rate and you can get three different numbers. One counts only cancellations. Another adds downgrades. A third subtracts expansion and reports a negative figure. All three are using the phrase correctly. They are measuring different things.
This guide separates the terms: revenue churn rate, gross revenue churn, and net revenue churn. It gives the formula for each, a worked example, how each maps to retention, and which one to use for which decision. For the basic split between revenue and logo churn, see tracking revenue churn for Shopify apps.
TL;DR: Gross vs Net Revenue Churn
Why the Same Phrase Gives Different Numbers
The confusion is mostly about terminology. Baremetrics' help documentation treats revenue churn as the revenue lost to downgrades and cancellations, and net revenue churn as the version that accounts for upsells and expansion. In other words, plain revenue churn there means gross.
ChartMogul's explanation adds two useful facts. Gross MRR churn will always be higher than the net figure and cannot be negative by definition. And its net figure counts both expansion and reactivation as gains, which not every source does. Whatever you choose, write the definition down and use it every period.
The Formulas
The first four share one denominator: the MRR of merchants who were subscribed at the start of the period. Merchants who joined mid-period sit outside both the numerator and the denominator.
The NRR formula matches the one on FirstDistro's NRR guide. The annualisation formula comes from ZoomInfo's churn guide. It matters because monthly churn compounds, so a monthly rate cannot simply be multiplied by twelve.
The inputs come from the movements covered in MRR changes by customer. Churn, contraction, and expansion are the same buckets, so the two views always reconcile.
A Worked Example
A Shopify app starts the month with $10,000 in MRR. Cancellations remove $400 and downgrades remove $200. Two versions of the month differ only in expansion. The figures are illustrative.
Both months lose exactly the same revenue. Gross churn is 6.0% in each. Month B posts negative net churn only because more expansion arrived. If you reported net alone, the two months would look very different. If you reported gross alone, they would look identical.
Why monthly churn cannot be multiplied by twelve
A 5% monthly rate sounds like 60% a year. It is not, because each month's loss comes out of a base that is already smaller. Compounding gives 1 minus 0.95 to the twelfth power, which is about 46%. Use the compounded figure when comparing against annual benchmarks.
Which One to Use for Which Decision
Baremetrics' comparison describes gross churn as the clear look at revenue loss without sugar coating, and net churn as the way to track revenue changes from the existing base. That split maps neatly onto decisions.
The plan split is covered in churn rate by pricing plan. Expansion is covered in revenue opportunities in existing customers.
Negative Net Churn: Good News With a Catch
Negative net churn happens when expansion exceeds the revenue lost. ChartMogul calls it the holy grail of SaaS growth, and it is widely read as a sign of a strong product and pricing power. It is genuinely good. It is also easy to over-read.
Hubifi's guidance makes a related point. A high gross churn rate can look worrying, yet strong upsells can leave the business flourishing. The reverse warning matters more for a Shopify app. Strong net numbers should never replace a look at gross churn by plan.
A simple check helps. Ask how much of this month's expansion came from your three largest expanding merchants. If the answer is most of it, the net figure is fragile. The merchants behind it are visible in the customer-level view.
Benchmarks: Handle With Care
General guidance offers rules of thumb. FirstDistro's bands read NRR above 110% as strong, 100% to 110% as growing slowly, and 90% to 100% as shrinking. It suggests the healthiest companies pair gross retention above 90% with net retention above 110%.
Context changes the reading. ZoomInfo's guide notes that annual contracts produce structurally lower monthly churn than month-to-month subscriptions. Many Shopify app plans bill monthly, so comparing them with annual-contract SaaS benchmarks is unfair. Compare each period with your own history, and compare plans with each other.
Reading Gross and Net Together
Net churn can never be higher than gross churn when expansion is positive. So the two figures fall into four useful patterns.
Each pattern points to a different guide. Leaks connect to finding at-risk customers and why some plans churn more. Pricing consequences are covered in plan-level churn data and pricing strategy.
The wider context sits in the Shopify app performance dashboard, where revenue and retention are two of the six categories, and in customer lifetime value, which depends directly on the churn rate you choose.
Tracking Both Without a Spreadsheet
Elevate reads subscription data from your Shopify Partner account. It tracks revenue churn separately from customer churn and breaks churn out by plan. Gross and net figures can be built from the same underlying movements, so the two never disagree.
General SaaS guides explain the definitions clearly. None of the pages reviewed reconcile them for a self-serve app that bills monthly, sells tiered plans, and mixes recurring and usage charges. That combination is where this page sits.
Frequently Asked Questions
What is the difference in gross vs net revenue churn?
Gross revenue churn counts only the MRR lost to cancellations and downgrades. Net revenue churn subtracts expansion from those losses, so it shows the overall change from your existing merchants.
Can revenue churn be negative?
Net revenue churn can be negative when expansion exceeds the revenue lost. Gross revenue churn cannot be negative, because it counts only losses.
How do I calculate gross revenue churn rate?
Add churned MRR and contraction MRR, divide by the MRR at the start of the period, and multiply by 100. Only merchants who were subscribed at the start count.
How do gross revenue churn and gross revenue retention relate?
They are opposites. Gross revenue retention is 100% minus the gross revenue churn rate. Net revenue retention is likewise 100% minus the net revenue churn rate.
Should reactivation be included in net revenue churn?
Definitions differ. Some sources count reactivation as a gain alongside expansion and others do not. Choose one treatment, document it, and apply it every period.
Which should a Shopify app report, gross or net?
Both, clearly labelled, and split by plan. Gross shows how well you keep revenue. Net shows whether expansion outruns the losses. Neither alone tells the full story.