Churn Rate Calculator

How to calculate churn rate

Churn rate is the share of your customers, or of your recurring revenue, that you lose over a period. Customer churn is calculated in four steps:

1. Pick the period. Monthly is standard when most customers pay monthly. If most customers are on annual contracts, use a quarter or a full year.
2. Count paying customers at the start of the period. Only customers who were active on day one belong in the base.
3. Count how many of those customers cancelled during the period. Leave out customers who signed up during the period, even if they also cancelled.
4. Divide lost customers by starting customers and multiply by 100.

How to calculate revenue churn rate

Revenue churn (also called MRR churn) uses money instead of headcount. Take the MRR lost from customers who cancelled during the period and divide it by the MRR you had at the start of the period.

Two variations are worth tracking alongside it. Gross revenue churn adds downgrades (contraction MRR) to the lost MRR. Net revenue churn also subtracts expansion MRR, so it can go below zero when existing customers grow faster than others leave.

Worked example

A B2B SaaS company starts March with 400 paying customers and $40,000 in MRR. During March:

• 12 of the 400 starting customers cancel. Together they paid $1,000 a month.
• 25 new customers sign up, and one of them cancels before the month ends.
• Existing customers downgrade by $400 MRR and upgrade by $1,800 MRR.

The results:

• Customer churn: 12 / 400 = 3.0% monthly. The new signup who cancelled is not counted, because they were never part of the 400.
• Annualized customer churn: 1 - (1 - 0.03)^12 = 30.6%.
• Revenue churn: $1,000 / $40,000 = 2.5%.
• Gross revenue churn: ($1,000 + $400) / $40,000 = 3.5%.
• Net revenue churn: ($1,000 + $400 - $1,800) / $40,000 = -1.0%, which is net negative churn.

Customer churn is higher than revenue churn here, which usually means smaller accounts are leaving while larger ones stay. To get gross revenue churn from the calculator, choose Revenue Churn and enter churned plus contraction MRR as the MRR lost.

Monthly vs annual churn

Churn compounds. Each month you lose a share of a customer base that is already smaller, so you cannot multiply a monthly rate by 12. The calculator converts it like this:

At 3% monthly churn, simple multiplication suggests 36% a year, but the compounded figure is 30.6%. At 5% monthly churn it is about 46%, not 60%. To compare an annual figure with monthly benchmarks, reverse it: monthly churn = 1 - (1 - annual churn)^(1/12). A 20% annual churn rate is about 1.8% a month.

If most of your customers are on annual plans, a single month says little, because cancellations bunch up around renewal dates. Measure churn over a quarter or a year, or follow each renewal cohort with cohort analysis.

Common churn calculation mistakes

• Counting new customers. Adding new signups to the base, or their cancellations to the lost count, dilutes the rate. Measure only the customers you started the period with.
• Using the end-of-period count. If you grew, the ending base is bigger and churn looks lower than it is.
• Multiplying monthly churn by 12. Annual churn compounds, as shown above.
• Mixing customer and revenue churn. They answer different questions, and a benchmark for one does not apply to the other.
• Lumping failed payments in with cancellations. Card failures (involuntary churn) need a dunning fix, not a product fix, so track them separately from voluntary churn.
• Reading too much into small numbers. With 50 customers, one cancellation moves monthly churn by two percentage points. Look at a three- or six-month average before drawing conclusions.

What's a good churn rate?

It depends mostly on who you sell to. Smaller customers go out of business, switch tools and cut costs more often than larger ones, so the same churn rate can be healthy for one company and a warning sign for another. Published benchmarks for monthly customer churn:

The first three rows come from Lenny's Newsletter, built on ProfitWell data from about 13,000 SaaS companies. ChartMogul also reported median monthly churn of 6.5% for companies under $300k ARR and 3.7% for companies at $1–3M ARR, and suggests the best companies target less than 2% a month.

For revenue churn, SaaS Capital's 2025 survey of more than 1,000 private B2B SaaS companies found a median gross revenue retention of 91%, meaning the median company loses about 9% of its starting recurring revenue a year to cancellations and downgrades. Companies on month-to-month contracts were slightly below that at 89%, and companies with contracts above $250,000 a year kept 95%.

The calculator's verdict bands (below 2% excellent, 2–5% good, 5–7% needs attention, above 7% high) are a simplified version of these ranges for B2B monthly churn. If you sell low-priced plans to very small businesses, compare yourself with the price-point medians instead.

How this calculator works

• Customer churn is customers lost divided by customers at the start of the period. Enter only customers who were active when the period began.
• Revenue churn is MRR lost divided by MRR at the start of the period. The MRR lost field is meant for churned MRR. Add contraction MRR to it if you want gross revenue churn. Expansion is not part of the calculation.
• Annual churn assumes the rate you entered repeats every month for 12 months and compounds: 1 - (1 - monthly rate)^12. If your numbers cover a quarter or a year, read the first result as the rate for that period and ignore the annual conversion.
• Limitations: one period is a snapshot. Seasonality, one large cancellation or a price change can swing a single month, and the simple formula cannot separate voluntary from involuntary churn. The math runs in your browser.

How to reduce churn

• Understand why customers leave. Exit surveys and cancellation flows reveal patterns you can act on.
• Improve onboarding. Customers who never reach their "aha moment" churn faster.
• Watch engagement. Falling usage often shows up weeks before a cancellation.
• Offer annual plans. Longer commitments reduce the number of moments a customer can leave.
• Recover failed payments. Dunning emails and card updaters win back customers who never meant to leave.

Related metrics and guides

• Churn rate, the full guide to customer churn
• MRR churn and net MRR churn, for revenue churn in depth
• Net revenue retention (NRR) and gross revenue retention (GRR), the retention side of the same numbers
• Customer lifetime value (LTV), which churn drives more than anything else
• What is a good customer churn rate?, a longer look at benchmarks

Turn your churn rate into revenue numbers with the LTV calculator, or measure retention including upsells with the NRR calculator.