What is churn rate?
Churn rate measures how much of an existing customer base you lose during a period. For a subscription SaaS, customer churn usually counts paying accounts that stop being customers. Revenue churn measures the recurring revenue lost through cancellations and downgrades. Losing one large account can have a small effect on the customer count and a large effect on revenue.
Define the period first: for example, October 1 through October 31 in your billing system’s reporting timezone. Freeze the group of customers active at the start and follow that group to the end. Customers first acquired during October belong in a separate acquisition and early-retention view. Adding them to the opening denominator makes losses look smaller without improving retention.
Churn rate calculator
This calculator uses a simple opening-cohort convention: count opening customers still lost at period end, and measure revenue losses against opening MRR. Exclude customers who joined during the period and exclude cancellation events reversed by reactivation before period end. Enter net expansion from the opening group, without double-counting a reversed downgrade.
Use normalized opening revenue for cancellations and downgrades, rather than summing every billing event. The calculator rejects combined losses greater than opening MRR under this convention. It does not import billing data, identify cohorts, forecast churn, or reconcile a vendor dashboard’s event-accounting rules. A zero opening denominator produces no rate.
Start with the fictional example, then enter one completed period. Use the same currency for every MRR amount. Calculations stay in your browser; there is no form submission.
- Customer churn
- 4.00%
- Gross revenue churn
- 7.00%
- Net revenue churn
- -2.00%
- Net revenue retention
- 102.00%
Negative net revenue churn means expansion exceeded losses in this opening customer group. Customers can still have left.
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Customer churn rate formula and a worked example
Customer churn rate = opening customers lost by period end ÷ customers at period start × 100. Count accounts consistently: if a company buys several subscriptions, canceling one subscription may reduce revenue while leaving the company an active customer. Decide whether your reporting unit is an organization, a subscriber, or an individual seat.
In our fictional example, 200 paying accounts start the month and eight of those accounts are still canceled at month end. Customer churn is 8 ÷ 200 × 100 = 4%. The opening group retains 192 accounts, or 96%. If 30 new customers also join, the overall ending customer count is 222, but customer churn remains 4%. Growth in the total count does not erase the eight losses.
ChartMogul’s standard customer churn calculation adjusts for customers who both join and leave during the interval and for same-period reactivations. Check those conventions when comparing a manual calculation with a billing report. Record the rule beside the number so a colleague can reproduce it.
Gross revenue churn, net revenue churn, and NRR
Use monthly recurring revenue throughout this example. MRR normalizes recurring subscriptions to a month; it is not the same as invoices collected that month. An annual upfront payment should not become twelve months of apparent growth followed by eleven months of apparent churn. The MRR guide explains the revenue bridge separately.
Our fictional opening group has $10,000 MRR. Cancellations remove $500, downgrades remove another $200, and expansion adds $900. The group loses accounts but grows its recurring revenue to $10,200. Both statements matter when reviewing the business. The calculations below use only that opening group and assume the amounts have already been normalized.
| Metric | Formula | Result |
|---|---|---|
| Customer churn | 8 ÷ 200 × 100 | 4% |
| Gross revenue churn | ($500 + $200) ÷ $10,000 × 100 | 7% |
| Net revenue churn | ($500 + $200 − $900) ÷ $10,000 × 100 | −2% |
| Net revenue retention (NRR) | ($10,000 − $500 − $200 + $900) ÷ $10,000 × 100 | 102% |
Can churn be negative?
Customer churn under this opening-cohort definition cannot be negative. Gross revenue churn also cannot be negative because it only counts losses. Net revenue churn can be negative when expansion from existing customers exceeds cancellations and downgrades. In the example, −2% net churn is equivalent to 102% NRR.
A negative net figure can still hide a retention problem. Imagine a few large accounts expanding while many smaller accounts leave. Inspect customer churn, gross revenue churn, and the affected segments alongside NRR. Do not subtract revenue from newly acquired customers when calculating net churn: that measures overall growth instead of retention.
Monthly versus annual churn: avoid multiplying by twelve
If a hypothetical opening cohort loses 4% of its remaining customers every month, the retained share after twelve months is 0.96 to the power of 12. Implied annual churn is 1 − 0.96¹², or about 38.73%. Multiplying 4% by twelve gives 48%, which ignores the shrinking customer base.
This is a constant-rate scenario, not an annual forecast. Actual renewal timing, customer mix, seasonal demand, and the age of a cohort can change the result. Measure observed annual churn from an actual twelve-month opening cohort when that history exists. Compare completed windows of the same length; a half-finished month should be labeled as partial.
Window: one completed month, with a stated timezone Opening cohort: paying accounts active at the start Lost: opening accounts still canceled at the end Customer churn: lost / opening accounts × 100 Gross revenue churn: (canceled + downgraded opening MRR) / opening MRR × 100 Net revenue churn: (canceled + downgraded opening MRR − expansion) / opening MRR × 100 NRR: 100% − net revenue churn New customers: reported separately
What is a good churn rate, and what should you investigate?
There is no useful universal target without context. A consumer subscription renewed monthly and an enterprise contract renewed annually expose different opportunities to leave. Before using a benchmark, match the billing cadence, account value, customer type, metric definition, and observation window. Compare your own consistent cohorts over time as well.
For a small SaaS, show counts beside percentages. One lost account out of ten is 10%; two lost accounts out of twenty is also 10%, with different evidence behind it. Group losses by the job customers hired the product to do, the acquisition source, plan, and first-value experience. Separate voluntary cancellations from unresolved payment failures before choosing a remedy.
Read the actual support and cancellation context, then test one plausible improvement. A confusing import flow needs a different response from an unused premium feature or an expired payment method. Use the small-user retention guide to turn those observations into a follow-up plan.
Download the churn calculation checklist
The editable checklist includes the fictional numbers, formulas, exclusions, and a place to record your billing report’s conventions. Keep that record with each review so future changes in the metric can be explained. Formula sources were checked on October 26, 2026.