How to use the churn rate calculator
Customer churn measures the share of customers who leave:
- Choose the period you counted over: one month, one quarter or one year. The calculator converts the result to monthly and annual equivalents either way.
- Enter customers at the start, the paying customers on the first day.
- Enter new customers added during the period and customers at the end. The calculator works out how many churned.
Revenue churn measures the share of recurring revenue you lose from existing customers. Enter starting MRR, MRR from cancellations, MRR lost to downgrades (contraction) and MRR gained from upgrades (expansion) in the same period. Leave new-customer MRR out entirely.
The survival chart follows a group of customers who all start in the same month and shows the share still paying after each month for three years.
The churn rate formulas
Customer churn rate = Customers churned ÷ Customers at the start
Retention rate = 1 − Churn rateAll counts are paying customers for the same period.
Monthly churn = 1 − (1 − Annual churn)1/12
Average customer lifetime = 1 ÷ m months
Share of a cohort left after t months = (1 − m)tm is the monthly churn rate. A quarterly rate q converts with m = 1 − (1 − q)1/3.
Net revenue churn = (Churned MRR + Contraction MRR − Expansion MRR) ÷ Starting MRRNet revenue churn is negative when expansion is larger than churned and contraction MRR combined. Net revenue retention = 1 − net revenue churn.
A worked example
Customer churn. Company D, a fictional SaaS business, starts the month with 800 customers, signs 60 customers and ends with 836 customers. That means 24 customers left, a monthly churn rate of 3.00% and retention of 97.00%.
Compounded over twelve months, that is annual churn of 30.6%. The average customer stays 33.3 months, and half of any group of new customers has left after 22.8 months.
Revenue churn. The same month starts with $120,000 of MRR. Cancellations remove $1,800 and downgrades $600, so gross revenue churn is 2.00%. Upgrades add $3,000, which makes net revenue churn -0.50%: revenue from existing customers grew to $120,600 even though some of them left.
Monthly and annual churn are not a factor of 12 apart
Multiplying monthly churn by 12 overstates annual churn, and dividing annual churn by 12 understates monthly churn. The reason is compounding: churn in month two applies only to the customers still left after month one. At 3.00% a month, simple multiplication gives 36% a year, but the correct figure is 30.6%.
The same conversion matters when you count over a quarter. If a quarter starts with 800 customers, adds 150 customers and ends with 878 customers, quarterly churn is 9.00%, which is 3.09% a month and 31.4% a year. Always state the period next to a churn figure; “5% churn” means something very different monthly and annually.
Why a point of churn matters so much
Small differences in monthly churn compound into large differences in how long customers stay:
| Monthly churn | Annual churn | Average lifetime | Cohort left after 3 years |
|---|---|---|---|
| 1% | 11.4% | 100.0 months | 69.6% |
| 2% | 21.5% | 50.0 months | 48.3% |
| 3% (the example) | 30.6% | 33.3 months | 33.4% |
| 5% | 46.0% | 20.0 months | 15.8% |
| 7% | 58.1% | 14.3 months | 7.3% |
Going from 3% to 2% monthly churn adds more than 16 months to the average lifetime, and because customer lifetime value is proportional to lifetime, it raises LTV by half. At 7%, most of a cohort is gone within a year, and growth depends on replacing customers rather than adding them.
The chart compares your churn with half the rate to make that gap visible over 36 months.
Customer churn versus revenue churn
Customer churn treats every account the same. Revenue churn weights each loss by what the customer paid, which usually matters more to the business. Losing ten small accounts can cost less than one large one, and a product whose biggest customers keep buying more can grow even with steady logo churn.
Gross revenue churn shows the leak before upgrades, so it can never be negative and is the cleaner measure of product fit and service quality. Net revenue churn includes expansion. Negative net churn, also called net revenue retention above 100%, is widely seen as a sign of a strong subscription business, because the existing base grows on its own. With expansion of only $1,200 instead of $3,000, net churn would be 1.00% rather than -0.50%, and the cohort’s revenue would shrink each month instead of grow.
Common counting mistakes
- Including free or trial users. Count paying customers only, or report trial conversion separately.
- Using the end-of-period count as the denominator. Fast growth makes churn look lower. Some teams divide by the average of start and end counts; the calculator shows that version too, at 2.93% for the example.
- Mixing new-customer churn into the base. Customers who join and leave in the same period count as churned against a start count that never included them. Long periods and fast growth exaggerate this, so monthly measurement is more precise.
- Counting new-customer revenue as expansion. It turns real revenue churn into an artificially negative number.
What this calculator does not include
- Changing churn over time. The survival curve uses one constant rate. Real cohorts usually lose more customers early and fewer later, so cohort tables from your own data are more accurate.
- Voluntary versus involuntary churn. Failed payments are often a large share of cancellations and can be reduced with better billing retries; split them out if you can.
- Segments. One average hides differences between plans, channels and customer sizes.
- Reactivations. Returning customers are not modeled in the revenue churn tool; the MRR & ARR calculator includes them in its MRR movement bridge.