The churn rate to use in a forecast is one an investor will accept without arguing, even if your real history is better. This company's churn was about 0.5% a year, so the forecast uses a more careful rate and keeps the real record as upside to show later.
The company sells mobility to big employers. Staff book a pool car, an e-bike or a scooter through one app, and the employer pays. It works across eight kinds of vehicle in two countries. The founders were getting ready for a Series B.
The business was in good shape. The way it was being explained was not.
Investors kept counting the wrong thing
Most software is priced per user. So investors kept asking how many users the company had and what each one paid. It was the wrong question. This company charges for the fleet, the vehicles an employer puts on the platform, not for the people who ride them.
When the model talked about users, investors built the wrong picture in their heads. So we rebuilt revenue around the fleet. Each vehicle type has its own access fee. An employer that adds more vehicles pays more. Users are still in the model. They show how much the fleet gets used.
A SaaS churn rate nobody would believe
Churn is the share of customers who leave each year. The company's history showed churn of about 0.5% a year. Almost nobody left.
That sounds like great news. In a pitch, it isn't. An investor who sees a number that low assumes it's either wrong or won't last. Then they quietly mark down everything else in the deck.
So we reframed it. The forecast uses a more careful churn rate, one an investor will accept without arguing. The real history is still there to show. Now it reads as upside, and nobody has to fight about it.
Showing how customers grow
For a Series B, investors also ask whether customers spend more over time. That's net dollar retention. It compares what a group of customers pays this year with what they paid last year.
We built it from two pieces the founders already tracked: how fast revenue per customer grows, and how many customers leave. Putting it together this way means every investor can check it from the inputs. No one has to take it on trust.
Other checks we ran
- We split the numbers by country, with a separate dashboard for each, because the two markets grow differently
- We tested revenue per employee against normal software benchmarks. Ours came out far above them, so we added the support staff a growing customer base would really need
- We wrote the deck around a reason big employers buy: they need to cut emissions from staff travel
A number that looks too good can hurt you. Forecast with a figure an investor will accept, and keep the record as proof you can show later.
Questions founders ask
What churn rate should I use in a financial forecast?
Use a rate an investor will accept without arguing, close to what's normal for your market, even if your own history is better. A number that looks too good makes investors doubt the rest of the model. Keep your real record ready as proof, so it reads as upside instead of a claim to fight over. If your customer groups behave very differently, give each group its own churn rate.
What is a good churn rate for SaaS?
It depends on who you sell to. Software sold to small businesses on monthly plans often loses a small share of its customers every month. Software sold to big companies on long contracts often loses only a small share a year. In this case, churn of about 0.5% a year was so low that investors wouldn't believe it, so the forecast used a more careful rate and kept the real figure as upside.
How can net revenue retention be over 100%?
Net revenue retention compares what a group of customers pays this year with what the same group paid last year. It goes over 100% when the customers who stay spend more, through price rises, more seats or, here, more vehicles, by more than the revenue lost from customers who leave. We built it from two inputs the founders already tracked: growth in revenue per customer and the share of customers who leave.