Why use this calculator
Customer churn rate is one of the most critical metrics for any subscription or recurring revenue business. Even small improvements in retention can have outsized impacts on revenue and profitability. Understanding your churn rate helps you identify problems, set retention targets, and calculate the lifetime value of your customers. Investors and stakeholders often view churn as a key indicator of product-market fit and business health.
How to use it
Enter the number of customers at the start of your measurement period, how many you lost during that period, select whether the period is monthly, quarterly, or annual, and your average revenue per customer. The calculator computes your churn rate, projects it annually, and shows the revenue impact.
The formula
Churn Rate = (Lost Customers / Start Customers) x 100. Annual Churn Rate = 1 - (1 - Period Churn Rate)^Periods Per Year. Customer Lifetime = 1 / Churn Rate. Lost Revenue = Lost Customers x Revenue Per Customer.
Worked examples
SaaS company with 1,000 customers losing 50 per month at $99 each
5% monthly churn rate, approximately 46% annual churn, and $4,950 in monthly lost revenue
Subscription box with 5,000 subscribers losing 200 quarterly at $35 each
4% quarterly churn rate, approximately 15.4% annual churn, and $7,000 in quarterly lost revenue
When people use it
- Tracking retention performance over time
- Calculating customer lifetime value for acquisition budgeting
- Setting churn reduction goals and measuring progress
- Forecasting revenue impact of improved or worsening retention
Tips
- Best-in-class SaaS companies maintain monthly churn rates below 2%; above 5% signals serious retention issues
- Distinguish between voluntary churn (cancellations) and involuntary churn (failed payments) as they require different solutions
- Net revenue retention (accounting for expansion revenue) is often more useful than logo churn for revenue forecasting
Questions people ask
- What is a good churn rate?
- It varies by industry. For B2B SaaS, a monthly churn rate under 2% (about 22% annually) is considered healthy. For B2C subscription businesses, monthly churn of 3-7% is common. Enterprise SaaS companies with annual contracts often see annual churn rates of 5-10%.
- How does churn relate to customer lifetime value (CLV)?
- CLV is directly tied to churn: CLV = Average Revenue Per Customer / Churn Rate. A 5% monthly churn means an average customer lifetime of 20 months. Reducing churn from 5% to 4% increases average lifetime from 20 to 25 months, a 25% increase in lifetime value.
- Should I measure gross churn or net churn?
- Both are valuable. Gross churn counts all lost customers regardless of new acquisitions. Net churn accounts for expansion revenue from existing customers. A company can have positive gross churn but negative net revenue churn if remaining customers upgrade faster than others leave.