What Is Churn Rate?

Churn rate is the percentage of customers who cancel or fail to renew during a given period, usually measured monthly. If you start the month with 1,000 customers and 40 cancel, your monthly churn rate is 4%. Churn is the single biggest constraint on subscription growth: it caps your customer lifetime value, drags on revenue compounding, and quietly decides whether your acquisition spend builds a business or fills a leaking bucket.

How Churn Rate Is Calculated

Note the denominator: customers at the start of the period, excluding new signups. A common mistake is dividing by end-of-month customers, which mixes in users who couldn't have churned yet and flatters the number. This calculator also compounds your monthly figure into annualized churn — 4% monthly is not 48% per year, it's 38.7%, because the base shrinks each month.

Customer Churn vs Revenue Churn vs NRR

Counting logos tells only half the story. Customer churn treats a $10/month customer and a $2,000/month customer identically. Gross revenue churn weights losses by dollars, revealing whether you're losing your biggest accounts. Net revenue retention (NRR) adds expansion revenue back in — upgrades, seat additions, upsells — and is the number investors care about most. NRR above 100% means your existing customer base grows in value even with zero new sales, the defining trait of top-tier SaaS companies. Public SaaS leaders routinely report NRR of 110–130%.

What Is a Good Churn Rate?

• SMB SaaS: under 2% monthly is healthy; 3–5% is common but costly; above 5% is a structural problem
• Mid-market SaaS: under 1% monthly
• Enterprise SaaS: near zero monthly — annual contracts should renew above 90%
• Consumer subscriptions: 4–6% monthly is typical; even great consumer products churn faster than B2B
• NRR: above 100% is good, above 110% is excellent, above 120% is elite

How to Use This Calculator

Enter your customers at the start of the month and how many cancelled during it — you'll instantly get monthly churn, retention, annualized churn, and average customer lifespan. Add your starting MRR and MRR lost to churn and downgrades to see gross revenue churn, and add expansion MRR to unlock net revenue retention. The verdict grades your customer churn against the SMB SaaS benchmarks above; if you're enterprise or consumer, read your number against the appropriate band instead.

Worked Example

A SaaS business starts July with 1,000 customers and $50,000 MRR. During the month, 40 customers cancel, taking $2,000 of MRR with them, while existing customers add $1,500 in upgrades. Customer churn is 4% (annualized: 38.7%), average lifespan is 25 months, gross revenue churn is 4%, and NRR is ($50,000 − $2,000 + $1,500) ÷ $50,000 = 99%. Verdict: churn needs attention, and expansion isn't quite covering the leak — this founder's highest-leverage work is retention, not more ads.

How to Reduce Churn

• Fix onboarding first: most churn is decided in the first 30 days — customers who never reach the product's core value always leave
• Watch usage, not sentiment: declining logins predict cancellation weeks before a survey does; intervene on the signal
• Move to annual billing: annual plans convert twelve cancellation decisions per year into one
• Exit interviews at cancellation: a one-question "why?" at the cancel button is the cheapest research you'll ever run
• Fight involuntary churn: failed card payments cause a surprising share of losses — dunning emails and card updaters recover much of it

Churn in Your Metric Chain

Churn feeds directly into LTV (lifespan = 1 ÷ churn), which pairs with CAC to define your unit economics; those in turn drive your burn rate and runway. If your churn came in above benchmark, run the LTV calculator next with a lower hypothetical churn figure — seeing the LTV difference usually settles the "retention vs acquisition" budget debate on the spot.

Frequently Asked Questions