Enter the number of customers you had at the start of a period and how many left during that period. The tool instantly shows your churn percentage.
A month opening with 1,240 customers, of whom 87 cancel.
7.02 percent monthly churn.
Only customers present at the start can churn during the period, so including mid-period signups understates the rate — and understates it most in exactly the months when you are growing fastest. That is what makes churn look deceptively healthy during a strong acquisition run and then appear to spike when growth slows. Same denominator every month, or the trend is measuring your marketing rather than your retention.
Multiplying monthly churn by 12 overstates the annual figure badly, because each month churns a base that has already shrunk. The correct conversion is 1 − (1 − monthly)^12: 7.02 percent monthly is about 58 percent annually, not 84. Working in the other direction, an annual figure divided by 12 understates the monthly rate. Whenever you compare a churn number against anything, confirm both are on the same period.
This calculation counts customers, treating a small account and a large one identically. A month where you lose thirty small accounts and keep every large one looks far worse by customer churn than it does in revenue, and the reverse is more dangerous — losing two enterprise accounts can be catastrophic while barely moving this figure. Track revenue churn alongside it, and when they diverge, the gap tells you which end of your customer base is leaving.
Retention is 100 minus churn, so 7.02 percent churn is 92.98 percent retention. The implied average customer lifetime is 1 ÷ churn periods — here, about 14.2 months. That figure feeds directly into lifetime value, which is why churn is usually the number with the most influence in a subscription business: cutting it from 7 to 5 percent extends the average lifetime from 14.2 months to 20.
Divide the number of customers lost during the period by the number you had at the start, then multiply by 100. Keep customers acquired during the period out of the denominator, or the rate is artificially low.
It depends entirely on the market, the price point and the contract length, so a number that is healthy in one business is alarming in another. The comparison that actually helps is against your own trend and against churn broken down by segment, plan and tenure — a blended figure often hides one cohort leaving quickly and another staying for years.
Use 1 − (1 − monthly rate)^12 rather than multiplying by 12. At 7.02 percent monthly that gives roughly 58 percent annually. Multiplying gives 84 percent, which is wrong because each month applies to a smaller base.
Average lifetime is roughly 1 divided by the churn rate, expressed in the same period. At 7.02 percent monthly that is about 14.2 months. It is an approximation that assumes a constant rate, and real churn is usually higher early in a customer’s life than later.
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