Logo churn counts customers; revenue churn counts dollars. Which one is lower depends entirely on whether the accounts that leave are bigger or smaller than average, and the gap between them is often the most informative single number you can compute from a subscription export.
TL;DR: Low logo churn is compatible with severe revenue churn when the departing accounts are large. Here is how to test the two against each other and read the divergence.
Logo churn is the figure most billing dashboards show first, and it is the intuitive one — customers are countable, dollars require normalising annual plans and handling partial periods. A seller quoting logo churn is quoting the number in front of them. The issue is that a buyer is acquiring revenue, and the two series diverge in exactly the situation a buyer most needs to know about.
Four mechanisms account for most of the gap between this claim and what the raw rows show. They are not mutually exclusive and they compound.
Losing 2% of logos that represent 8% of revenue is a serious event described in reassuring terms. Compute both and look at the ratio; a revenue-to-logo ratio above 2× means the book is losing its best customers.
Hundreds of low-price accounts make the logo percentage small and stable no matter what happens at the top. Recompute logo churn on the accounts that make up 80% of revenue and see whether the answer survives.
An account moving from $500 to $50 has not churned by any logo measure and has taken 90% of its revenue with it. Contraction has to be measured separately or it disappears entirely from a logo-based view.
Where one customer holds several subscriptions, cancelling most of them barely registers as logo churn. Aggregate to the account level before counting anything.
Every step below runs on a subscription-level export in a spreadsheet. None of it needs access to the seller's live billing account, which matters, because as a buyer you will not get one.
These are the thresholds we use in our own reports. They are working thresholds rather than industry standards, and the right line for a given deal depends on contract length, tenure and how transferable the customer relationships are.
| What you find | Verdict | What to do about it |
|---|---|---|
| Revenue-to-logo churn ratio between 0.8 and 1.3 | Green | Departures are roughly average sized. The logo figure is a fair summary. |
| Ratio 1.3–2.0 | Investigate | Larger accounts are leaving faster. Look at what the departing cohort has in common. |
| Ratio above 2.0 | Price it in | The book is losing its best customers while the logo count looks stable. Underwrite on revenue churn only. |
| Contraction above 2% of opening MRR per month | Investigate | Significant revenue loss that no logo-based measure will ever show. Add it to the retention picture explicitly. |
| Logo churn on the top-80%-of-revenue accounts is much worse than the headline | Price it in | The tail was flattering the figure. The commercially relevant part of the book is churning faster. |
Ask for these before the LOI. After the LOI you are renegotiating rather than negotiating, and a seller who will not produce subscription-level rows has told you something useful either way.
Illustrative. Logo churn of 1.8% a month, which is genuinely good. Revenue churn on the same base is 5.1%, giving a ratio of 2.8. Average revenue per churned account is $340 against $118 for retained accounts. Recomputing logo churn on the accounts making up the top 80% of revenue gives 4.4%. The book has hundreds of small accounts that stay and a steady loss of the large ones that pay for everything. Both numbers are correct. The seller quoted the one that describes the customer list, and you are buying the revenue.
The revenue-to-logo ratio is the cheapest high-value calculation in buyer-side diligence: two numbers you were computing anyway, one division, and it immediately tells you whether the churn you are being shown describes the part of the business you are paying for. Where the ratio is high, look at what the departing large accounts share — a plan, a vintage, a channel, a use case — because that commonality is usually the actual finding.
The relevant tool on this site is the free churn calculator, which runs the arithmetic above on a file you paste in. The full method is documented in the 5-risk buyer-side method and the due-diligence checklist.
Every check on this page can be run by hand in a spreadsheet, and if you have the time you should. If you would rather not: send us the target's subscription export and we run the full human-reviewed analysis — logo churn, revenue churn, customer concentration, annual-plan decay, zombie MRR and an A–F revenue-quality grade. The free Starter tier covers one CSV per month, which is enough to check a single deal.
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Logo churn is the share of customers lost; revenue churn is the share of recurring revenue lost. They differ whenever departing accounts are not average sized. If you lose many small customers, revenue churn is lower than logo churn; if you lose a few large ones, it is higher, and that is the case a buyer needs to catch.
Yes, and it is one of the most common ways a retention story misleads. A long tail of small accounts that stay keeps the logo percentage low and stable while larger accounts leave. Take the ratio of revenue churn to logo churn: above about 2 means the book is losing its best customers.
Not as logo churn, and that is the problem. An account that drops from $500 to $50 has taken 90% of its revenue away without appearing in any customer-count measure. Contraction has to be measured separately as revenue lost from accounts that shrank but stayed, or it vanishes from the analysis entirely.