Churn Rate Formula: How to Calculate It
The Churn Rate Formula measures the percentage of customers or subscribers who stop using a product or service over a given period, providing a critical indicator of customer retention health for your SaaS business.
Bottom Line
The Churn Rate Formula measures the percentage of customers or subscribers who stop using a product or service over a given period, providing a critical indicator of customer retention health for your SaaS business.
Churn & Retention Calculator
Estimate recovered customers and revenue lift from retention improvements.
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Formula
Copy the exact expression or work through it step by step below.
Churn Rate = Customers Lost / Starting Customers x 100 Variables
CR
Churn Rate
The percentage of customers lost over the period. The single clearest signal of retention health; even low monthly churn compounds badly over a year.
CL
Customers Lost
The count of customers who cancelled or lapsed during the period. Use logos lost, not revenue, for this customer-churn version.
SC
Starting Customers
The number of customers at the start of the period. The denominator; do not include customers added mid-period.
Step By Step
- 1
Set the baseline case with the real calculator inputs.
Active Customers = 1,200, Monthly Churn Percent = 4.00%, Retention Lift Percent = 1.50%, Monthly ARPU = 129
- 2
Fix the period and use the customer count at its start as the denominator, counting only customers lost within that same window.
1,200 starting customers with 48 lost in the month sets up a 48 over 1,200 ratio.
- 3
Apply the formula and read the first calculator outputs, not just the headline assumption.
The calculator lands with recovered customers at horizon at 150.35 and improved churn rate at 2.50%.
- 4
Re-run across monthly and annual windows, since a 4% monthly churn compounds to roughly 39% annually, not 48%.
4% monthly retention of 96% over 12 months leaves about 61% of customers, a 39% annual churn.
Worked Example
Churn Rate sample case
Active Customers
1,200
Monthly Churn Percent
4.00%
Retention Lift Percent
1.50%
Monthly ARPU
129
The churn-retention calculator starts with 1,200 active customers and compares 4.0% monthly churn against an improved 2.5% (a 1.5-point retention lift) over 12 months. The recovered customers are the gap between the two ending counts.
The calculator lands with recovered customers at horizon at 150.35 and improved churn rate at 2.50%.
Common Variations
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Sources & References
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