Churn rate calculator

How the calculator works out churn

Customer churn is the share of customers who were paying at the start of the month and canceled during it:

customer churn = customers lost / customers at the start

Revenue churn does the same with money: the MRR you lost to cancellations and downgrades, divided by MRR at the start. Net revenue churn then takes off expansion, the extra MRR existing customers added by upgrading or buying more seats. When expansion is bigger than what you lost, net revenue churn goes below zero, which is the good kind of negative.

With 200 customers, 10 cancellations, $6,000 MRR, $300 lost and $120 of upgrades, customer churn is 10 / 200 = 5%, revenue churn is 300 / 6,000 = 5% and net revenue churn is (300 - 120) / 6,000 = 3%. The churn rate glossary entry covers the edge cases.

Why 5% a month is a lot

Monthly churn compounds. Keeping 95% of customers each month leaves 0.95 to the power of 12, about 54%, after a year, so 5% monthly churn is about 46% a year. The calculator shows that figure under "Yearly churn" so the monthly number does not look smaller than it is.

The average customer lifetime is roughly one divided by monthly churn: at 5%, about 20 months. That lifetime is what drives customer lifetime value, which is why small cuts in churn are worth so much.

Which customers to count

Count customers, not subscriptions: someone with two plans who cancels both is one lost customer. Leave out free users and trials that never paid. New customers who joined and left in the same month are a judgment call; the simple formula above leaves them out, while Stripe's Billing analytics divides by customers at the start plus new customers in the period, which gives a slightly lower rate. Pick one rule, say which, and keep it.

Measure the same window each time, usually a calendar month. Comparing a 30-day churn figure with a quarterly one is the most common way founders confuse themselves.

Churn and the number you share

Churn is the quiet half of MRR: you can add customers every week and still go nowhere. If you post your MRR in public, a figure that updates itself shows the flat months as honestly as the good ones. makerhandle reads it from Stripe, Paddle, Lemon Squeezy or RevenueCat with a read-only key and shows it with a check mark, see verified revenue. For the other numbers worth tracking, read SaaS metrics for indie hackers.