Churn Rate Calculator

Calculate customer churn rate and retention rate. Critical metrics for subscription business health and growth.

Customer Churn Rate
churnRate%
Percentage of customers lost
Retention Rate
retentionRate%
Percentage of customers retained
Revenue Churn
$revenueChurn
Lost recurring revenue
Annualized Churn
annualChurn%
Projected annual churn
💡 Churn Benchmarks
• B2B SaaS: 5-7% annual churn is good, <5% is excellent
• Consumer SaaS: 5-10% monthly churn is typical
• Enterprise SaaS: 6-10% annual churn is standard
• E-commerce: 20-40% annual churn is common
• Reducing churn 1% can increase customer lifetime 14%

How to Calculate Customer Churn Rate

Churn rate is the percentage of customers who cancel or stop using your product during a given period. It is the inverse of retention and one of the most critical metrics for subscription businesses.

The Churn Rate Formula

Churn Rate = (Customers Lost / Customers at Start of Period) × 100
Also called: Attrition Rate or Customer Churn

Step-by-Step Calculation

Step 1: Count Customers at Period Start

Use the customer count at the beginning of your measurement period:

Example: Started month with 1,000 active customers

Step 2: Count Customers Lost

Count all customers who cancelled, downgraded to free, or stopped paying:

Example: 50 customers cancelled during the month

Step 3: Calculate Churn Rate

Complete Example
  • Customers at Start: 1,000
  • Customers Lost: 50
  • Churn Rate = (50 / 1,000) × 100 = 5%

This means 5% of your customer base churned during the period.

Churn Rate Benchmarks by Industry

Business TypeMonthly ChurnAnnual Churn
Enterprise SaaS0.5-1%6-10%
SMB SaaS3-5%30-50%
Consumer SaaS5-10%50-70%
E-commerce Subscriptions5-10%40-60%
Media/Streaming4-7%35-55%

Types of Churn to Track

1. Customer Churn (Logo Churn)

Percentage of customers who cancel completely. Most basic metric.

2. Revenue Churn (MRR/ARR Churn)

Percentage of recurring revenue lost. More important than customer churn for business health.

3. Gross Churn vs Net Churn

  • Gross churn: Total revenue/customers lost
  • Net churn: Gross churn minus expansion revenue from existing customers

Calculating Revenue Churn

Revenue Churn = (MRR Lost to Churn / MRR at Start) × 100
Example: Lost $5,000 MRR / $100,000 starting MRR = 5% revenue churn

Strategies to Reduce Churn

1. Improve Onboarding

  • Implement guided product tours
  • Set clear success milestones
  • Achieve first value within 48 hours
  • Assign customer success managers
  • Create onboarding email sequences

2. Identify At-Risk Customers

  • Monitor product usage metrics
  • Flag declining engagement
  • Track support ticket patterns
  • Survey customer satisfaction (NPS)
  • Proactively reach out before cancellation

3. Add Product Value Continuously

  • Ship features customers request
  • Improve core product performance
  • Add integrations for lock-in
  • Build network effects
  • Create switching costs

4. Implement Win-Back Campaigns

  • Survey churned customers for reasons
  • Offer incentives to return
  • Address specific pain points
  • Follow up 3-6 months post-churn

Churn Cohort Analysis

Track churn by customer cohort to identify patterns:

CohortMonth 1Month 3Month 6Month 12
Jan 20248%5%3%2%
Feb 20247%4%3%—
Mar 20246%3%——

Improving cohorts show declining month-1 churn (8% → 6%), indicating better onboarding and product-market fit.

Frequently Asked Questions

What is a good churn rate?

For B2B SaaS: under 5% annually is excellent, 5-7% is good, above 10% needs attention. For SMB SaaS: under 3% monthly (36% annually) is strong. For enterprise SaaS: under 10% annually is healthy. Consumer apps see 5-10% monthly churn. The key is: churn should be declining over time, not increasing.

How do I calculate churn rate?

Formula: (Customers Lost / Customers at Start) × 100. Example: Lost 50 of 1,000 customers = 5% churn. Always use customers at period start, not average or end. Measure monthly for tactical decisions, quarterly for trends, annually for strategic planning.

What is the difference between customer churn and revenue churn?

Customer churn counts customers lost. Revenue churn measures revenue lost from churned customers. If you lose 10 small customers ($10 MRR each) vs 1 large customer ($500 MRR), customer churn is different but revenue impact varies dramatically. Track both, but prioritize revenue churn for business health.

Can I have negative churn?

Yes, through negative net revenue churn. This happens when expansion revenue from existing customers (upsells, cross-sells) exceeds revenue lost to churn. Example: Lose $10k MRR to churn but gain $12k from expansions = -20% net revenue churn. This is the gold standard for SaaS businesses.

How can I reduce churn rate?

Top strategies: 1) Improve onboarding to show value faster, 2) Proactively engage at-risk customers based on usage data, 3) Build customer success programs, 4) Continuously add product value, 5) Offer annual contracts with discounts, 6) Create integration lock-in, 7) Survey churned customers to identify patterns. Focus on preventing churn, not just reacting to it.

What is a churn cohort analysis?

Track churn by customer cohort (signup month/quarter). Example: January signups might have 8% month-1 churn, 5% month-2, stabilizing at 3% after month-6. This reveals onboarding effectiveness and identifies at-risk periods. Mature cohorts should have lower churn than new ones if product is sticky.

Should I include downgrades in churn calculation?

Track three metrics separately: 1) Customer churn (full cancellations), 2) Revenue churn (includes downgrades), 3) Logo churn (count-based). A customer downgrading from $100 to $50 MRR is 50% revenue churn but 0% customer churn. Revenue churn is usually most important for business health.

How does churn rate impact company valuation?

Lower churn = higher valuation multiples. Companies with <5% annual churn trade at 10-15x revenue. Companies with 30%+ churn trade at 2-4x revenue. Each 1% reduction in monthly churn can increase company value 12-20%. Investors heavily weight churn because it determines long-term viability and growth efficiency.

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