Churn Rate Calculator

Understanding Churn Rate and Customer Retention

Churn rate is a fundamental business metric that measures the percentage of customers or subscribers who cancel or stop doing business with a company over a given time frame. For subscription, SaaS, and recurring revenue business models, monitoring churn rate is critical to maintaining predictable growth and profitability.

Customer Churn Rate Formula

Customer churn rate calculates the ratio of lost customers during a period relative to the number of active customers at the start of that period.

$$\text{Customer Churn Rate (\%)} = \left( \frac{\text{Lost Customers}}{\text{Start Customers}} \right) \times 100$$

Where lost customers can be determined from starting customers ($C_s$), new additions ($C_a$), and ending count ($C_e$):

$$\text{Lost Customers} = C_s + C_a - C_e$$

The customer retention rate is simply the inverse of customer churn rate:

$$\text{Retention Rate (\%)} = 100\% - \text{Customer Churn Rate (\%)}$$

Gross vs Net MRR Churn Rate

Revenue churn evaluates the monetary impact of customer attrition on Monthly Recurring Revenue (MRR).

• Gross MRR Churn Rate: Reflects total revenue lost due to cancellations and downgrades without considering expansion revenue.
• Net MRR Churn Rate: Factors in expansion revenue (upsells, cross-sells, account upgrades). A negative Net MRR Churn Rate indicates negative churn, where expansion revenue exceeds lost revenue.

$$\text{Gross MRR Churn (\%)} = \left( \frac{\text{Churned MRR} + \text{Contraction MRR}}{\text{Starting MRR}} \right) \times 100$$

$$\text{Net MRR Churn (\%)} = \left( \frac{\text{Churned MRR} + \text{Contraction MRR} - \text{Expansion MRR}}{\text{Starting MRR}} \right) \times 100$$