How to use the churn rate calculator
- Enter the customers at the start of the period and the customers lost during it. Count only customers who were there at the start.
- Optionally enter the new customers added to see the ending customer count, and choose the length of the period.
- Open the advanced options to add revenue at the start, revenue lost to churned customers and expansion revenue from the customers who stayed.
- Read churn, retention, annualized churn, the average customer lifetime and, with revenue, gross and net revenue churn.
Formula
Customer churn rate = customers lost / customers at the start
Retention rate = 1 - churn rate
Annualized churn = 1 - (1 - churn)^(12 / months in the period)
Average lifetime = 1 / churn rate, in periods
Net revenue churn = (lost revenue - expansion revenue) / starting revenue
A negative net revenue churn means expansion from existing customers more than made up for the revenue lost.
Worked example
A service starts the month with 1,000 customers and loses 50, so churn is 5% and retention is 95%. If that rate held every month, annual churn would be 1 - 0.95^12 = 45.96%, and the average customer would stay 20 months.
With $50,000 of starting revenue, $3,000 lost to churned customers and $1,000 of expansion, gross revenue churn is 6% and net revenue churn is 4%. With 120 new customers the month ends with 1,070.
Customer churn and revenue churn
Customer churn counts people, while revenue churn weighs the money. They differ when large customers behave differently from small ones. Net revenue churn includes upgrades, so a business can lose customers and still grow revenue from the ones who stay.
Why annualizing helps and misleads
A small monthly rate adds up quickly. A 5% monthly churn is not a 60% yearly churn, because the base shrinks each month, which the compound formula handles. Annualizing assumes the same rate each period, which rarely holds for young businesses. Use it as a comparison, not a forecast. To see what a customer is worth, use the customer lifetime value calculator.
Using churn to guide decisions
Lower churn lengthens the average lifetime and often matters more than adding customers. Combine it with your conversion data in the sales funnel calculator, your satisfaction score from the NPS calculator and your costs per acquisition in the ad metrics calculator.
Assumptions and limits
- Customers lost are drawn only from those present at the start of the period.
- Annualized churn and lifetime assume the rate stays the same each period.
- Pauses, downgrades and reactivations count only as you count them in your inputs.
- Revenue figures are for the same period as the customer counts.
Frequently asked questions
How do you calculate churn rate?
Divide the customers lost in a period by the customers at the start of the period. Losing 50 of 1,000 customers is a 5% churn rate.
What is a good churn rate?
It depends on the business and customer type, so there is no single answer. Compare against your own history and your own goals instead of a universal number.
What is net revenue churn?
It is revenue lost from churned customers minus extra revenue from existing customers, as a share of starting revenue. A negative value means existing customers grew revenue overall.
How is customer lifetime related to churn?
Average lifetime is one divided by the churn rate. At 5% monthly churn, the average customer stays about 20 months.