---
title: "Fewer than 25 paying customers: when one cancellation moves the numbers"
url: https://firstpassmemo.com/flags/few-paying-customers/
updated: 2026-10-07
publisher: FirstPass Memo (hello@firstpassmemo.com)
---

Red flag explained · Customers and retention

# Fewer than 25 paying customers: when one cancellation moves the numbers

Short answer: With fewer than 25 paying customers, each one is about 4% or more of revenue on average, so losing one or two changes the numbers. Small customer bases are also more likely to know the founder personally. Ask for revenue by customer and how each large customer was won.

Updated 7 October 2026 · Checker rule FEW_CUSTOMERS

## When the checker raises it

Raised as medium severity when a recurring-revenue listing states fewer than 25 paying customers.

## Why it matters

Averages hide spread. Twenty customers can mean twenty roughly equal accounts, or one large account and nineteen small ones.

Early customers are often the founder's contacts. They may stay out of loyalty to the person, and leave when the person does.

## A worked example

Composite example, not a real listing

B2B SaaS reporting tool for marketing agencies Asking price: $70,000 MRR: $3,000 Average monthly profit: $2,500 14 paying customers Churn: 2% monthly Revenue verified via Stripe Business age: 3 years Owner hours: 6 hours per week

Traffic or revenue sources typed in: Direct 50%, Referral 50%.

What the red-flag checker (https://firstpassmemo.com/checker/) returns: payback of 28 months on average monthly profit, and this flag:

Medium Only about 14 paying customers

Each customer is roughly 7.1% of revenue on average, so losing one or two moves the numbers.

Ask: Can you share revenue by customer for the top 10 over the last 12 months?

The same example also raises: Concentration not disclosed (https://firstpassmemo.com/flags/concentration-not-disclosed/).

## What to check

- Ask for revenue by customer for the top 10 over the last 12 months.

- Ask how each of the largest customers found the product.

- Ask whether any customer has been told about the sale, and how they reacted.

## Questions to send the seller

- Can you share revenue by customer for the top 10 over the last 12 months?

- Are any customers, partners or suppliers personal contacts of yours who may not stay after a sale?

- Can you share revenue by customer or partner for the top 10 over the last 12 months?

- How many paying customers are there, and how many are on discounted, legacy or lifetime plans?

## Related flags

- Top customer above 25% (https://firstpassmemo.com/flags/top-customer-over-25-percent/)

- Churn above 5% a month (https://firstpassmemo.com/flags/monthly-churn-above-5-percent/)

- All red flags explained (https://firstpassmemo.com/flags/)

## Useful next

- Buying a micro-SaaS (https://firstpassmemo.com/buy/micro-saas/)

- Free red-flag checker (https://firstpassmemo.com/checker/): paste a listing and see which flags it raises.

The checker is a set of plain rules, not an AI model, and its flags are prompts for questions, not verdicts. Composite examples are invented. Informational screening only, not investment, legal or tax advice.

---

FirstPass Memo is informational screening, not investment, legal, tax, accounting or valuation advice, and not an audit. Seller figures are not independently verified. HTML version: https://firstpassmemo.com/flags/few-paying-customers/