Churn Rate Calculator
Customer churn and revenue churn are different numbers and a business can be healthy on one while the other is on fire. So the churn rate calculator computes both, plus the retention figure that matters more than either.
Monthly customer churn
- Customer churn (monthly) 36 of 1,200 customers. The 90 you won are deliberately not in this denominator. Adding them is the most common way churn gets understated.
- 3%
- Customer churn (annual) Compounded, not multiplied: 1 - (1 - 3%)^12. Multiplying by twelve would give 36%, which overstates it, and the gap widens as the rate rises.
- 30.6%
- Logo retention The complement of customer churn. Average customer lifetime is 1 / churn = 33.3 months.
- 97%
- Gross revenue churn $2,400.00 canceled plus $900.00 downgraded, over $96,000.00. Expansion is excluded on purpose: this is the hole before anything fills it, and it can never be below zero.
- 3.44%
- Net revenue retention Below 100%. $2,700.00 of expansion against $3,300.00 of losses leaves a $600.00 monthly hole that new sales have to fill before the business grows at all.
- 99.38%
- Gross revenue retention The same figure with expansion removed. Investors ask for both, because net retention above 100% can hide heavy churn in a small number of growing accounts.
- 96.56%
- Net retention, annualized 99.38% compounded over twelve months. A cohort left entirely alone keeps 92.8% of its revenue after a year.
- 92.8%
- Customers at month end 1,200 - 36 + 90. Net growth of 54.
- 1,254
- Who is leaving Leavers paid $66.67 against a $80.00 average: it is the small accounts leaving, which is the benign case. Customer churn overstates the revenue impact.
- 0.83x average revenue
| Monthly | Annual churn | Retained after a year | Avg lifetime |
|---|---|---|---|
| 0.5% | 5.8% | 94.2% | 200 mo |
| 1% | 11.4% | 88.6% | 100 mo |
| 2% | 21.5% | 78.5% | 50 mo |
| 3% | 30.6% | 69.4% | 33.3 mo |
| 5% | 46% | 54% | 20 mo |
| 8% | 63.2% | 36.8% | 12.5 mo |
- Customer churn and revenue churn answer different questions. Losing a tenth of your customers matters far less if they were the smallest tenth, and far more if they were the largest.
- Net revenue retention is the figure to watch, because it is the only one that can exceed 100%. A business above 100% grows without selling to anybody new.
How the Churn Rate Calculator works
Churn is the share of what you had at the start of a period that was gone by the end of it. The formula is one division and the mistakes are all in choosing what to divide.
CUSTOMER CHURN is customers lost divided by customers at the start. 36 of 1,200 is 3%. The critical detail is the denominator: customers won during the period do not belong in it. Including them flatters the number whenever you are growing, and it flatters it most in the months you grow fastest, which is exactly when a churn problem is easiest to miss.
Annualizing is the second trap. Churn compounds, so 3% a month is 30.6% a year, not 36%. Each month's losses come from a base already reduced by the previous month's. Multiplying by twelve always overstates the annual figure and the error grows with the rate: 8% a month is 63% a year, not 96%.
REVENUE CHURN is the same calculation on money, and it is a different number because customers are not the same size. Gross revenue churn counts cancellations plus downgrades over starting revenue. Downgrades matter here and are invisible in customer churn: an account that halves its seat count has not churned by any customer measure and has taken half its revenue with it. In most subscription businesses contraction is a larger number than people expect and is tracked less carefully than cancellation.
NET REVENUE RETENTION subtracts expansion from those losses. If upgrades, seat growth and usage increases exceed what cancellations and downgrades took away, net retention is above 100% and the revenue from a fixed group of customers grows on its own. That is the most valuable property a subscription business can have, because it means growth does not depend entirely on new sales. Compounded over a year, a cohort at 103% monthly net retention is worth 43% more than it started.
Investors ask for gross and net retention together, and the reason is that net retention can conceal things. A company losing half its small customers while two large accounts expand rapidly can report net retention well above 100% and still have a product that most buyers abandon. Gross retention cannot exceed 100% by construction, so it shows the hole before anything fills it.
The last thing worth computing is who is leaving. Divide the revenue lost by the customers lost, and compare it with your average. If leavers were paying more than average, revenue churn will run ahead of customer churn and the headline rate understates the damage. If they were paying less, you are losing the accounts that cost the most to serve and the headline rate overstates it. The same 3% means opposite things in those two businesses.
One structural caveat applies to all of it: a single blended rate assumes every customer has the same probability of leaving, and they do not. Churn is front-loaded, concentrated in the first few months before a customer has got value out of the product. A cohort that survives its first quarter churns at a materially lower rate than the blended figure suggests, which is why the average lifetime implied by 1/churn is pessimistic for your established customers and optimistic for the ones you signed last week.
Churn Rate Calculator FAQ
How do you calculate monthly churn rate?
Divide the customers lost during the month by the customers you had at the start of it. 36 lost from 1,200 is 3%. Customers acquired during the month must not go in the denominator: including them lowers the rate whenever you are growing, which hides a churn problem precisely when growth is masking it.
What is a good churn rate for SaaS?
It depends almost entirely on who you sell to. Monthly churn of 3-5% is common for small-business and self-serve products; enterprise contracts usually run under 1% a month, often under 0.5%. A more useful test than any benchmark is whether net revenue retention is above 100%, because that determines whether the business grows without new sales.
What is the difference between gross and net revenue retention?
Gross counts only the losses (cancellations and downgrades), so it can never exceed 100%. Net also credits expansion from existing customers, so it can. Both are needed: net retention above 100% can hide severe churn among small customers if a few large accounts are expanding fast enough to cover it.
Why is annual churn not twelve times monthly churn?
Because it compounds on a shrinking base. After the first month you are losing 3% of 97%, then 3% of 94.1%, and so on. Twelve months of 3% leaves 69.4% of the original customers, so annual churn is 30.6% rather than 36%. The discrepancy grows with the rate and becomes severe above about 5% a month.
Does revenue churn include downgrades?
Gross revenue churn should include them, yes. A customer who halves their spend has taken half their revenue away whether or not they canceled. Contraction is routinely undercounted because it does not show up in any customer-level report, and in mature subscription businesses it is frequently larger than outright cancellation.