Churn rate measures the percentage of customers or subscribers lost from an existing customer base during a defined period.
Churn Rate = Customers Lost During the Period ÷ Customers at the Start of the Period
A company that begins a month with 1,000 customers and loses 50 has a 5% customer churn rate for that month. The period, customer definition, and denominator method need to remain consistent before one churn figure is compared with another.
How to Calculate Churn Rate
| Input | What it means | Comparison check |
|---|---|---|
| Customers lost | Customers from the starting base who cancelled, failed to renew, or otherwise left under the company’s stated definition. | Use the same definition of a lost customer across periods or companies. |
| Starting customer base | The customer count at the beginning of the measurement period. | Do not mix starting-base calculations with another denominator method without adjustment. |
| Measurement period | The month, quarter, year, or contract period over which loss is measured. | Compare monthly with monthly and annual with annual. |
| Business context | Customer size, contract structure, renewal timing, and sales model. | A consumer subscription and an enterprise contract business can produce very different churn economics. |
For example, a company that starts a quarter with 2,000 customers and loses 120 during the quarter has customer churn of 6% for that period.
Customer Churn vs Revenue Churn
The two measures can diverge when customers differ materially in contract value. Losing one large account can have limited effect on customer-count churn while having a much larger effect on recurring revenue.
Weights each lost customer as one customer, regardless of account size.
Weights the loss by the recurring revenue attached to the customers or contracts that left.
Limits of a Churn Rate
Blended churn may look stable while individual customer segments behave differently. The reading becomes less comparable when periods, customer definitions, denominator methods, or business models change. For company analysis, churn is more useful when it is read alongside recurring-revenue retention and the economics of the customers being lost.
Related Retention Metrics
| Metric | What it adds | Reference |
|---|---|---|
| Revenue churn | Shows the recurring-revenue loss attached to churned customers or contracts. | Revenue churn |
| Gross revenue retention | Shows how much recurring revenue remains before expansion from retained customers. | Gross revenue retention |
| Net revenue retention | Adds expansion and contraction within the existing customer base. | Net revenue retention |
| SaaS churn | Applies churn analysis to the contract, billing, and recurring-revenue mechanics of software businesses. | SaaS churn rate |