Churn Rate Calculator
Calculate customer and revenue churn, retention rate, annualised churn, and the average customer lifetime implied by the periodic churn rate. Standard SaaS metric used by VC firms and growth teams.
Customer churn rate
4%
- Customer retention rate
- 96%
- Annualised churn (compounded monthly)
- 38.73%
- Average customer lifetime (months)
- 25
- Gross MRR churn rate
- 5%
- Customers lost
- 20
- Customers at start
- 500
Churn rate is the share of paying customers lost over a period — customers lost divided by customers at the start of the period. Retention is its mirror. Annualised churn compounds a monthly rate over twelve months. Average customer lifetime is the reciprocal of the periodic churn rate (months when churn is monthly). Gross MRR churn applies the same formula to recurring revenue and is reported alongside customer churn because high-paying customers leaving distort the picture if you only count heads.
How to use this calculator
Enter the number of paying customers you had at the start of the period and the number that cancelled during it. The calculator returns the churn rate and its mirror, retention rate. Optionally enter MRR at the start of the period and MRR lost from cancellations and downgrades to also get gross MRR churn. The annualised churn figure compounds the periodic rate over twelve months — useful for translating a monthly churn rate into the more intuitive annual number that boards and investors expect.
How the calculation works
Churn rate is the share of subscribers lost in a period: customers lost divided by customers at the start of the period. Retention rate is one minus the churn rate. Annualised churn from a monthly rate is 1 − (1 − monthly churn)^12 — you compound the survival probability, not the churn itself. Average customer lifetime is the reciprocal of the periodic churn rate: a monthly churn of 4% implies a mean customer lifetime of 25 months. Gross MRR churn applies the same formula to recurring revenue and excludes expansion revenue from existing customers (that would be net revenue churn, a separate metric).
Worked example
A SaaS company starts the month with 500 paying customers and loses 20 during the month. Monthly churn = 20 / 500 = 4%. Retention = 96%. Annualised churn = 1 − (0.96)^12 = 1 − 0.6127 = 38.7%. Average customer lifetime = 1 / 0.04 = 25 months. If MRR was $100,000 at the start and $5,000 was lost to cancellations, gross MRR churn = 5,000 / 100,000 = 5% — the half-point gap between customer churn (4%) and revenue churn (5%) is the signal that the customers leaving were paying above-average prices.
Frequently asked questions
How do I calculate the churn rate?
Pick a period (almost always a month for SaaS, sometimes a quarter for enterprise). Divide the number of paying customers who cancelled during that period by the number of paying customers you had at the start of the period, then multiply by 100 to get a percentage. The single most common mistake is using the average of start and end customer counts in the denominator — that produces a smaller, prettier number, but it is not the standard definition, and it makes your churn look better than it is once growth slows.
What is the difference between customer churn and revenue (MRR) churn?
Customer churn counts heads — what fraction of subscribers cancelled. Revenue churn counts dollars — what fraction of recurring revenue cancelled. They diverge whenever your churning customers pay a different average price than your retained customers. If your enterprise plans cancel more often than your starter plans, revenue churn will exceed customer churn and the gap is the warning signal. Most companies report both, plus net revenue churn (which subtracts expansion revenue from existing customers and can go negative — the gold-standard SaaS metric).
What is a good churn rate for a SaaS business?
For B2B SaaS, monthly customer churn under 1% is considered excellent, 1–2% is healthy, 2–5% is the zone where the business is still viable but every percentage point matters, and above 5% monthly is unsustainable at scale (you are losing your entire customer base every two years). B2C subscriptions run hotter — 3–8% monthly is normal, and 10% is not catastrophic if acquisition is cheap. Enterprise SaaS with annual contracts often reports under 10% annual gross churn at the top quartile (Bessemer / OpenView benchmarks).
How do I annualise a monthly churn rate?
Use compounding, not multiplication. Annualised churn = 1 − (1 − monthly churn)^12. A 5% monthly churn rate annualises to 1 − 0.95^12 = 1 − 0.5404 = 45.96% — not 60%. The naive approach of multiplying by 12 overstates churn because it ignores the fact that customers who already cancelled cannot cancel again. The compound formula is the survival-analysis identity: you are computing the share of customers who survive every month for twelve consecutive months, then taking the complement.
What is average customer lifetime and how is it related to churn?
Average customer lifetime is the reciprocal of the periodic churn rate, expressed in the same period unit. If monthly churn is 4%, average lifetime is 1 / 0.04 = 25 months. This identity assumes constant churn — which is almost never literally true (early-period churn is usually higher than late-period churn) — but it is the standard simplification used in LTV calculations. Lifetime feeds directly into LTV: monthly gross profit per customer × average lifetime (months) = LTV.
Should I include trial users or non-paying users in the churn calculation?
No. Churn is a paying-customer metric. Including trials or freemium users distorts the number in either direction — trials with high natural drop-off inflate apparent churn even though no revenue was at stake, and freemium users who downgrade to free are sometimes counted as "churn" but cost nothing to keep. The cleanest definition: paying subscribers at the start of the period who were no longer paying at the end, expressed as a fraction of the starting paying-subscriber count. Track trial-to-paid conversion separately.