SaaS & Retention

Churn Rate Calculator

Monthly churn always sounds small and compounds brutally. Four percent a month reads like a rounding error and removes nearly two in five customers over a year. Enter your numbers and see the annual version.

Your numbers

Result

Monthly churn rate4.00%
Annualised churn38.7%
Net growth rate3.50%
Average customer lifetime25.0 months

FormulaMonthly churn = customers lost ÷ customers at start × 100. Annualised churn = (1 − (1 − monthly churn)^12) × 100

Worked example

Losing 96 of 2,400 customers is 4 percent monthly churn, which compounds to about 38.7 percent a year. Adding 180 new customers gives a net growth rate of 3.5 percent for the month, and the implied average lifetime is 25 months. The uncomfortable part is that more than half your monthly acquisition is spent replacing people who left.

What to watch for

Track customer churn and revenue churn separately. Losing many small accounts and losing one large one produce the same customer churn number and completely different business outcomes.

Segment churn by cohort age. Early churn in the first 60 days is usually an onboarding or expectation-setting problem, while churn at month 12 is usually a value or competitive problem, and the fixes have nothing in common.

Before spending more on acquisition at churn above 5 percent monthly, I would put the same money into retention. Filling a leaking bucket faster is the most expensive strategy in software.

Frequently asked questions

What is a good churn rate?

For small business software, monthly churn in the 3 to 5 percent range is fairly typical and under 2 percent is strong. Enterprise contracts should be far lower, often under 1 percent monthly, because of longer commitments and higher switching costs.

Should I count downgrades as churn?

Not as customer churn, but definitely as revenue churn. A customer who halves their plan has not left, though half their revenue has, and only tracking logo churn will hide a serious revenue leak.

Read next

You might also like

Ranked by how closely each page overlaps with this one, using a similarity model over the whole library.

Retention Rate CalculatorCalculate customer retention rate correctly by excluding new signups, plus churn, customers retained and the annualised rate.Calculator · shares customers, churnLTV CalculatorCalculate customer lifetime value from ARPU, gross margin and monthly churn, with average lifetime in months and revenue LTV.Calculator · shares churn, monthlyNet Revenue Retention CalculatorCalculate net revenue retention and gross revenue retention from expansion, contraction and churned MRR, plus a twelve-month projection.Calculator · shares churn, retentionARR CalculatorConvert MRR to annual recurring revenue and project ARR twelve months forward using your growth and churn rates.Calculator · shares churn, monthly

More SaaS & Retention calculators

LTV Calculator

Calculate customer lifetime value from ARPU, gross margin and monthly churn, with average lifetime in months and revenue LTV.

LTV to CAC Ratio Calculator

Calculate your LTV to CAC ratio, CAC payback period in months, and the maximum CAC a healthy 3x ratio would allow.

Retention Rate Calculator

Calculate customer retention rate correctly by excluding new signups, plus churn, customers retained and the annualised rate.

MRR Calculator

Calculate monthly recurring revenue, net new MRR from new, expansion and churned revenue, growth rate and annual run rate.

ARR Calculator

Convert MRR to annual recurring revenue and project ARR twelve months forward using your growth and churn rates.

CAC Payback Period Calculator

Calculate how many months it takes to recover customer acquisition cost from gross profit, plus first-year profit per customer.

This calculator runs entirely in your browser. Nothing you enter is sent to a server, logged, or stored. Figures are for planning and do not constitute financial advice. See disclosures.