How to calculate churn rate
- Enter how many customers you had at the start of the period and how many of those cancelled during it. Do not count customers who joined and left within the period in either number.
- Choose the period: month, quarter or year. Monthly and annual equivalents are calculated with compounding, so you can compare figures from different periods.
- Optionally add starting revenue, revenue lost to cancellations and downgrades, and expansion revenue from upgrades to see revenue churn and net revenue retention.
Customer churn versus revenue churn
Customer churn is the share of customers who leave: 36 out of 800 in a month is 4.5%. It sounds small, but compounded over a year it means losing about 42% of the customers you started with, which is why annual churn is shown too. The average customer lifetime is roughly one divided by monthly churn, here about 22 months, a key input for customer lifetime value.
Revenue churn can tell a different story. If the customers who leave are on small plans while others upgrade, revenue churn may be lower than customer churn, and net revenue retention (NRR) can exceed 100%, meaning existing customers grow revenue even with no new sign-ups. The best subscription businesses report NRR above 110%. Healthy monthly customer churn for consumer subscriptions is often 3–8%, while business software aims for under 1–2%. Measure churn consistently, segment it by plan and acquisition channel, and talk to customers who leave. Calculations run in your browser.
What is the churn rate formula?
Churn rate = customers lost during the period ÷ customers at the start of the period × 100.
How do I convert monthly churn to annual churn?
Annual churn = 1 − (1 − monthly churn)^12. 3% a month is about 30.6% a year, not 36%.
What is net revenue retention?
Revenue from existing customers at the end of a period, including upgrades and minus churn and downgrades, divided by their revenue at the start.