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Churn rate calculator: customer and revenue churn
Churn is the share of customers, or revenue, you lose in a period. It's the leak in a subscription business: a few percent a month looks small but compounds into a large share of the base each year, and it caps how big the business can grow.
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Churn rate calculator: worked example
- monthly churn in our example
- 2%
- compounded over a year
- ~21.5%
- average customer lifetime
- 50 months
- Monthly customer churn
- 2%
- Over a year (compounded)
- 21.5%
- Average customer lifetime
- 50 months
- Gross revenue churn
- 3%
The formulas
Example: 500 customers at the start of the month and 10 cancel, so monthly churn is 2%. Over a year that compounds to about 21.5%, not 24%, because each month's 2% is taken from a slightly smaller base. The average customer stays about 50 months. If those customers and some downgrades cost ₹0.3 lakh of a ₹10 lakh MRR base, gross revenue churn is 3%.
- Customer churn = customers lost in the month ÷ customers at the start of the month.
- Annual churn (compounded) = 1 − (1 − monthly churn)^12.
- Average customer lifetime (months) = 1 ÷ monthly churn.
- Gross revenue churn = MRR lost to cancellations and downgrades ÷ MRR at the start.
Customer churn vs revenue churn
The two can tell different stories. Losing many small customers can mean high customer churn but low revenue churn, while losing one large account can do the opposite. Track both, and pair revenue churn with expansion to get net revenue retention (see the ARR and MRR calculator).
Common mistakes
- Counting customers who joined during the month in the denominator or the losses: use only customers who were there at the start.
- Annualising by multiplying by 12, which overstates annual churn.
- Mixing free and paying users.
Questions founders ask
What is a good churn rate?
It depends on the market: businesses selling to small companies usually see higher monthly churn than those selling to large enterprises on annual contracts. Compare yourself with companies selling a similar product to similar customers.
How does churn affect LTV?
Lifetime value is often estimated as monthly gross profit per customer divided by monthly churn, so halving churn roughly doubles LTV.
What is negative churn?
When expansion revenue from existing customers is larger than the revenue lost to churn and downgrades, so revenue from the existing base grows: net revenue retention above 100%.
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Results are estimates for planning and learning, based only on the numbers you enter. They are not financial, tax or investment advice. All founder calculators.