What is Renewal Rate in SaaS? Explained

What Is Renewal Rate?

The renewal rate is the percentage of customers who renew their subscription or continue using a service after their initial contract period.

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It is calculated by dividing the number of customers who renew by the total number of customers whose contract expires in a given period, multiplied by 100%.

How To Calculate Renewal Rate?

Renewal Rate = (# of Renewing Customers / # of Expiring Customers) * 100%

An Example Of Renewal Rate

A company has 100 customers whose contracts expire in a month and 80 of them renew.
Renewal Rate = (80 / 100) * 100% = 80%

Insights About Renewal Rate

Renewal rate is a key metric for subscription businesses and indicates the success of the product, service, and customer experience.

A high renewal rate indicates that customers are satisfied and find value in the offering.

Renewal Rate