Churn rate calculator: the monthly rate and the revenue it takes with it

This page measures the size of the leak: how many customers and how much money drain away each month, and what that costs over a year. It is the sibling of the LTV calculator, which takes churn as an input to answer a different question, how much a customer is worth. If you want to know how much you can pay for a new customer, go to LTV. If you want to know how much your business loses while that discussion happens, stay here.

Three different churns, and only one shows up in the bank account

Almost every confused conversation about retention happens because three numbers share one name.

Customer churn counts heads: what percentage of the base cancelled. It is the easiest to measure and the easiest to misuse, because it treats the $50 customer and the $5,000 customer as the same loss. Gross revenue churn counts money: it adds what left through cancellations to what evaporated through downgrades, the quiet loss, the customer who stays but pays less. Net revenue churn subtracts expansion from that total, and it is the only one that can go negative, when upgrades pay for the cancellations.

The calculator shows all three on the same scale, next to expansion, because the distance between the gross bar and the net bar is exactly how much your existing base is holding up the result without you selling anything.

How to use it

1. Fill in customers at the start of the month. Use the active base on day one, excluding everyone who joined after: someone who arrived mid month did not have a full month in which to cancel and does not belong in the denominator.
2. Enter the new customers and the ones who cancelled in the same month. A cancellation is an actual exit, not a cancellation request that was reversed.
3. Add the CAC. It does not enter the churn calculation itself, only the cost of replacing whoever leaves. Use the full CAC, with people and tools inside, the way it comes out of the CAC calculator.
4. Fill in recurring revenue at the start of the month and, separately, how much was lost to cancellations, how much was lost to downgrades and how much was gained from customers who were already paying. Revenue from new customers stays out of all three: that is acquisition, not retention.
5. Read the net churn bar first and the 12 month lost revenue figure second. The first says whether the leak is under control; the second says what it costs.

How it works: the formula

The monthly rates come from simple divisions. What almost nobody gets right is the annualization and the projection, because churn compounds: each month applies to whatever survived the previous one.

Revenue lost over 12 months is not the difference between today's MRR and the one a year from now: it is the sum of every monthly difference. An MRR that falls by $16,586.80 over the year did not cost $16,586.80, because you spent all twelve months billing less than you would have with a flat base. Summing month by month through the geometric series, the figure lands at 12 times starting MRR minus starting MRR times (1 minus net churn) times (1 minus that factor to the power of 12) divided by net churn.

Worked example (reproduces the default output)

The pre filled values describe a small SaaS: 500 customers on day one, 40 new customers, 15 cancellations, a CAC of $900, MRR of $100,000, $2,600 lost to cancellations, $900 to downgrades and $2,000 gained from customers who stayed.

• Customer churn: 15 ÷ 500 = 3.0% a month. Monthly retention: 97.0%. Base at the end of the month: 500 plus 40 minus 15 = 525 customers, net growth of 5.0%.
• Average revenue per customer: 100,000 ÷ 500 = $200.00 a month.
• Gross revenue churn: (2,600 plus 900) ÷ 100,000 = 3.5%, so GRR is 96.5%. Expansion: 2,000 ÷ 100,000 = 2.0%. Net churn: 3.5% minus 2.0% = 1.5%, so NRR is 98.5%.
• Compounded annual churn: 1 minus 0.97 to the power of 12 = 1 minus 0.693842 = 30.6%. By the wrong arithmetic, 3% times 12 = 36.0%. That is 5.4 points of exaggeration in a single spreadsheet row.
• Average lifetime: 1 ÷ 0.03 = 33.3 months. Half life: log(0.5) ÷ log(0.97) = 22.8 months until half of a cohort remains. Base still active at month 12: 69.4%.
• Revenue lifetime: 1 ÷ 0.015 = 66.7 months, double the customer one, because expansion absorbs half of the loss.
• MRR twelve months from now with no sales: 100,000 times 0.985 to the power of 12 = 100,000 × 0.834132 = $83,413.20, meaning $16,586.80 of MRR has evaporated.
• Cumulative revenue lost over 12 months: 12 × 100,000 minus 1,089,200.07 = $110,799.93. That is the large number at the top, and it is nearly seven times the MRR drop, because every month of the year billed less.
• Replacing the customers who leave costs 15 new customers a month, or $162,000 of acquisition a year, which is the price of standing still.
• Ceiling of the base: 40 ÷ 0.03 = 1,333 customers, or $266,667 of MRR. With one point less churn, the ceiling becomes 2,000 customers and $133,333 more MRR, without selling a single extra customer a month.

That last line is the whole argument. Going from 3% to 2% churn requires no media budget and raises the ceiling of the business by 50%. Doubling acquisition, from 40 to 80 customers a month, would double the ceiling too, but it would cost an extra $36,000 in CAC every month. Both levers exist; they simply do not cost the same.

How to read it and where the number misleads

The first limit is base size. With 40 customers, one cancellation moves churn by 2.5 points, and the monthly series becomes noise. A small base needs a quarterly window, or at least the three month average instead of the isolated month.

The second is the cohort hidden inside the average. Churn is rarely constant: it is high in the first months and falls later, once the people who remain are the people who liked the product. An average of 3% can be 8% in the first quarter of life and 1% after that, and those two businesses need opposite remedies, one in onboarding and one in recurring value. If your acquisition grew fast, the average rises even when nothing got worse, simply because more of the base is new.

The third is involuntary churn, the failed card. It tends to be a surprising share of the total and it is fixed neither by product nor by pricing, but by retries, expiry notices and card updates. It is worth separating the two in your own reporting before concluding that the product is disappointing people.

The fourth is the projection. Revenue lost over 12 months assumes today's churn frozen in place and no new sales, which is useful for sizing the leak, not for forecasting revenue. It is a comparison scenario, and it should be presented to the board as one.

From churn to a decision

• If net churn is high and gross churn is high too, the problem is pure retention. Start with reducing churn with experimentation, which is how a retention hunch becomes a test.
• If gross is high but net is low, expansion is holding up the result. Protect it: measure the effect of every offer change with the LTV calculator before touching pricing.
• If much of the exit happens inside the cancellation flow, test that flow before anything else. Cancel flow A/B testing is one of the few places where an experiment returns revenue as soon as the following month.
• If the exits cluster in the first thirty days, the subject is activation, not retention: start with trial to paid conversion.
• To size what each recovered point is worth in money, take the number to the experimentation ROI calculator.

FAQ

How do you calculate churn rate?

Divide the customers who cancelled during the period by the customers you had at the start of that same period. With 500 customers on day one and 15 cancellations in the month, monthly churn is 15 divided by 500, which is 3%. Customers who signed up during the month stay out of the denominator, because they did not have a full month in which to cancel. Including new customers in the denominator is the most common mistake and it makes churn look smaller than it is.

What is the difference between customer churn and revenue churn?

Customer churn counts heads; revenue churn counts money. If the customers who cancel pay less than average, revenue churn is lower than customer churn and the business is in better shape than it looks. If the ones leaving are the large accounts, revenue churn is higher and the bank account feels it before the customer count shows anything. That is why the two rates appear separately on this page: they are almost never equal, and whoever decides pricing and budget needs the revenue one.

What is net revenue churn and NRR?

Net churn subtracts expansion. You lose revenue to cancellations and downgrades, and you gain revenue from customers who were already paying and now pay more. Net churn is the gross loss minus that gain, and NRR (net revenue retention) is 1 minus net churn. NRR above 100% means negative net churn: even without selling to anyone new, your revenue grows. It is the strongest position a recurring business can hold, and it is what separates the SaaS companies that grow cheaply from the ones that buy growth every month.

What is an acceptable churn rate?

It depends on price point and cycle. In B2B SaaS with annual contracts and a high ticket, the market works with something between 0.5% and 1% a month; in self-serve SaaS and monthly B2C, 3% to 5% a month is common and not always a disease. What does not change is the arithmetic: 5% a month means losing roughly 46% of the base in a year, and that imposes a growth ceiling no media budget can fix. Instead of chasing a benchmark, compare your churn with your own previous month and with the cost of replacing everyone who leaves.

How do you turn monthly churn into annual churn?

By compounding, not multiplying. Annual churn is 1 minus (1 minus monthly churn) raised to the power of 12. At 3% a month, annual churn is 30.6%, not the 36% that multiplying by 12 suggests. The gap exists because whoever already cancelled cannot cancel again: each month applies to a smaller base. The calculator shows both numbers side by side precisely because multiplying by 12 travels widely through spreadsheets and always overstates the loss.

Why does churn create a growth ceiling?

Because at a constant acquisition pace, the base stops growing when cancellations equal signups. With 40 new customers a month and 3% churn, that happens at 40 divided by 0.03, which is 1,333 customers. It does not matter how long you keep that pace: the base converges to that ceiling. Cutting churn to 2% moves the ceiling to 2,000 customers without selling a single extra customer, which is why retention usually pays more than the same effort spent on acquisition.

Keep going

Churn is the metric that responds most to testing and the one fewest teams test. Start with the complete conversion rate optimization guide to build the method, then read cohort maturity in A/B testing, which explains why measuring retention too early misleads.