Definition
A cohort table puts each starting month in a row and months since start across the columns. It shows whether newer customers retain better or worse than older ones, which a single blended churn rate hides.
Formula
CohortsCohort retention at month n = Cohort MRR at month n ÷ Cohort MRR at month 0
Example
If customers who joined in March are at 101% of their starting MRR after six months while January’s are at 99%, recent cohorts are expanding faster.
Benchmarks
Look for curves that flatten, meaning retention stabilizes, and newer cohorts that sit above older ones.
Common mistakes
- Assigning customers to cohorts by contract date in one report and first invoice in another.
- Letting re-created subscriptions start new cohorts.
Examples use Demo Co, a fictional $3M ARR SaaS company, or a generic company where noted. Benchmarks are common reference points, not targets for every business.