Why use this calculator
Churn is the quiet number that decides whether a subscription business grows. A 5% monthly churn sounds small, but it compounds: after twelve months almost half of today's customers have gone, and every one of them has to be replaced before growth adds anything. Most owners multiply monthly churn by twelve and get 60%, or ignore compounding and underestimate the loss, and either mistake leads to bad targets.
This calculator converts churn measured over any period into a consistent monthly and annual rate, shows how many of today's customers will still be paying in a year, puts a dollar figure on the revenue that leaks away, and gives the average customer lifetime that sets how much you can afford to spend acquiring each customer.
How to use it
- Enter the customers at the start of the period as the count of active paying accounts on day one, which your billing system or Stripe dashboard shows.
- Enter the customers lost as the number of those same starting customers who cancelled or failed to renew, leaving out anyone who signed up during the period.
- Choose the period length that matches the dates of your two counts.
- Enter the monthly revenue per customer as your monthly recurring revenue divided by active customers, which most subscription billing tools report as ARPA; for annual plans divide the annual price by twelve.
What each result means
- Churn Rate for the Period
- The share of starting customers lost over the period you entered. It is only comparable with other businesses once converted to a common period.
- New Customers Needed Each Month to Stand Still
- How many new customers you must win every month just to replace the ones leaving at your current monthly churn rate. Growth only starts with sign-ups above this number.
- Fewer Losses a Month to Reach 2% Churn
- How many fewer customers you would need to lose each month for monthly churn to fall to 2 per cent, the level this page treats as healthy for B2B software. The note shows the monthly revenue that would protect.
- Monthly Churn Rate
- Your churn expressed per month so it can be compared with benchmarks. Under 2% is strong for B2B SaaS; above 5% signals a retention problem.
- Annual Churn Rate (Compounded)
- The share of today's customers gone after a year. It is lower than twelve times the monthly rate because each month's churn applies to a smaller base.
- Customers Left After 12 Months
- How many of today's customers will still be paying in a year if churn stays constant and you win no new ones.
- MRR Lost After 12 Months
- The monthly recurring revenue that will have disappeared a year from now, which new sales must replace just to stand still.
- Revenue Lost Over 12 Months
- The total revenue not collected across the year because customers left partway through, a better measure of this year's cost than MRR alone.
- Average Customer Lifetime
- How long the average customer stays, the inverse of monthly churn. Halving churn doubles lifetime.
- Lifetime Revenue per Customer
- Monthly revenue multiplied by lifetime. Multiply by gross margin to get lifetime value, which caps what you can spend to acquire a customer.
The formula
Period churn = customers lost / customers at start
Monthly churn = 1 - (1 - period churn)^(1 / months in period)
Annual churn = 1 - (1 - monthly churn)^12
Customers left after 12 months = start x (1 - annual churn)
MRR lost after 12 months = start x annual churn x monthly revenue per customer
Revenue lost over 12 months = sum for months k from 1 to 12 of start x (1 - (1 - monthly churn)^k) x revenue per customer
Average lifetime in months = 1 / monthly churn
Lifetime revenue = revenue per customer / monthly churn
How this number is used in practice
Benchmarks depend heavily on who you sell to. Enterprise SaaS with annual contracts often sees 5% to 10% annual logo churn, the equivalent of well under 1% a month. SaaS sold to small businesses usually runs at 2% to 5% a month because small businesses themselves fail and switch often.
Consumer subscriptions such as streaming, meal kits and apps commonly sit between 5% and 10% a month. Comparing your figure with the wrong segment produces either false comfort or needless panic.
The compounding is what catches founders out. At 5% a month you lose about 46% of a cohort in a year, and at 10% a month you lose about 72%, so a business growing at 10% a month in new sign-ups may be barely growing at all.
Split churn into voluntary cancellations and involuntary failed payments, because the fixes are different: better onboarding and value for the first, card updaters and dunning emails for the second. Track net revenue retention alongside logo churn, since upgrades from staying customers can more than offset the revenue of those who leave.
Worked examples
A SaaS product with 1,000 customers losing 50 in a month at $99 each
5.00% monthly churn compounds to 45.96% a year: 540 customers left and $45,504.35 of MRR gone after 12 months
A subscription box with 5,000 subscribers losing 200 in a quarter at $35 a month
4.00% quarterly churn is 1.35% a month and 15.07% a year, a 74.0 month average lifetime
A B2B platform with 400 accounts losing 40 over a year at $500 a month
10.00% annual churn, 0.87% monthly, and lifetime revenue of about $57,197.70 per account
When people use it
- Converting quarterly or annual churn into a monthly rate for benchmarking
- Estimating customer lifetime and the maximum affordable acquisition cost
- Showing investors the compounded annual effect of monthly churn
- Putting a dollar value on a retention project before funding it
- Setting a realistic churn reduction target for the next year
Tips
- Measure churn by sign-up month cohort. A blended rate hides whether newer customers are staying better or worse.
- Split voluntary cancellations from failed payments. Card updaters and retry emails recover a large share of involuntary churn cheaply.
- Offer an annual plan with a discount. Annual contracts cut churn sharply because the renewal decision happens once a year.
- Ask every cancelling customer why in one question. The top two reasons usually account for most of the loss.
- A one point cut in monthly churn is often worth more than a ten percent lift in new sales.
- Watch the first 90 days. Customers who reach their first real result early are far less likely to leave.
What it assumes, and where it stops being accurate
- Churn stays constant month to month. In practice it is usually highest in the first months after sign-up and falls for older cohorts.
- Lost customers are counted only from the starting cohort. New sign-ups who leave within the same period distort the rate and are excluded.
- Revenue per customer is flat. Upgrades, downgrades and price rises are ignored, so this is logo churn, not revenue churn.
- The 12-month projections follow only today's customers and ignore new acquisition.
- Lifetime uses the simple 1 / churn formula, which overstates lifetime when early churn is much higher than later churn.
Terms used on this page
- Churn rate
- The share of customers at the start of a period who cancel or fail to renew during it.
- MRR
- Monthly recurring revenue: the predictable subscription revenue billed each month.
- ARPA
- Average revenue per account: MRR divided by the number of active paying customers.
- Net revenue retention
- Revenue from a cohort now, including upgrades and downgrades, divided by its revenue a year ago.
- Cohort
- A group of customers who started in the same period, tracked together over time.
Questions people ask
- What is a good churn rate?
- For B2B SaaS, under 2% a month (about 22% a year) is healthy and under 1% is excellent. SaaS sold to small businesses often runs 3% to 5% a month. Consumer subscriptions commonly see 5% to 10% a month. Enterprise contracts can achieve 5% to 10% a year.
- Why is annual churn not twelve times monthly churn?
- Because each month's churn applies only to customers who are still there. At 5% a month you lose 50 of 1,000 in month one but only 47.5 of the remaining 950 in month two, and so on. Compounded, 5% a month is about 46% a year, not 60%.
- How does churn relate to customer lifetime value?
- Average lifetime in months is one divided by monthly churn, so 5% churn means a 20 month lifetime. Lifetime value is monthly revenue times gross margin times lifetime. Cutting churn from 5% to 4% lengthens lifetime from 20 to 25 months, a 25% rise in lifetime value.
- Should I track customer churn or revenue churn?
- Both. Customer or logo churn counts accounts lost. Revenue churn weights them by what they paid and includes downgrades. Net revenue retention also adds upgrades from remaining customers, and above 100% means the existing base grows even before new sales, which is the strongest position a subscription business can be in.
- Should new customers who cancel in the same month count?
- Not in this formula. Counting them in the numerator while excluding them from the starting count inflates churn. Track them separately as early cancellations, since they usually indicate an onboarding or expectation problem rather than a long-term retention problem.
Use this with
Customer Churn Rate Calculator answers one part of the question. These pick up where it stops: SaaS Gross Margin Calculator, Startup Burn Rate Calculator, Cash Flow Forecast Calculator and Break-Even Calculator.
Where these figures come from
This calculation is jurisdiction-neutral arithmetic. No country-specific rules are applied.
- Harvard Business Review: The Value of Keeping the Right Customers. Evidence on the cost of acquisition versus retention
- U.S. Small Business Administration: Manage your finances. Revenue forecasting and financial management for small businesses
- business.gov.au: Finance. Australian government guidance on business cash flow and forecasting
Customer Churn Rate Calculator produces an estimate for general information. It is not financial, tax, medical, legal or engineering advice. read the full disclaimer. Spotted a wrong number? Report it and it gets fixed. The form picks up this calculator and the inputs you used.