Churn Rate Calculator
Calculate your customer churn rate, retention rate, and annualized churn.
What is churn rate and why does it matter?
Churn rate measures the percentage of customers a business loses over a given period, calculated by dividing the number of customers lost by the number of customers at the start of that period. It's one of the most closely watched metrics in subscription and recurring-revenue businesses because even a small churn rate compounds over time — a business losing 5% of customers every month will lose a much larger share over a full year if it can't replace them, making churn a direct drag on growth.
Monthly versus annualized churn
A monthly churn rate can look deceptively small, so it's often useful to see it annualized to understand the real yearly impact. Annualized churn isn't simply the monthly rate multiplied by twelve — because churn compounds (you're losing a percentage of an already-shrinking base each month), the correct approach uses a compound formula: one minus the result of (1 minus the monthly churn rate) raised to the twelfth power. For example, a 5% monthly churn rate compounds to roughly 46% annualized churn, far higher than the naive 60% you'd get from simple multiplication, but still substantial and often surprising to business owners who only track the monthly number.
Retention rate: the flip side of churn
Retention rate is simply 100% minus the churn rate, representing the percentage of customers who stuck around. Tracking retention alongside churn gives a fuller picture: a business with 95% monthly retention sounds strong, but translating that into an annual figure often reveals it needs meaningful new customer acquisition each year just to offset losses. Businesses generally aim to reduce churn (and boost retention) through better onboarding, customer support, and ongoing product value, since retaining an existing customer is typically far cheaper than acquiring a new one.
Frequently Asked Questions
How do you calculate churn rate?
Divide the number of customers lost during a period by the number of customers you had at the start of that period, then multiply by 100 to get a percentage.
What is a good churn rate for a SaaS business?
Many healthy SaaS businesses target monthly churn under 3-5% for small-to-mid market customers, and under 1% for enterprise customers. Acceptable churn varies significantly by industry, price point, and customer segment.
Why isn't annualized churn just monthly churn times 12?
Because churn compounds — each month you're losing a percentage of an already-shrunk customer base, not the original base. The correct compound formula is 1 minus (1 minus monthly churn rate) raised to the 12th power, which produces a lower and more accurate figure than simple multiplication.
What's the difference between churn rate and retention rate?
They're complementary: retention rate is 100% minus the churn rate. If your monthly churn rate is 5%, your monthly retention rate is 95%.
Does this calculator account for new customers gained during the period?
No, this is a straightforward churn calculation based only on customers lost relative to your starting customer count. It does not net out new customer acquisition, which is tracked separately as a growth metric.
How can I reduce my churn rate?
Common strategies include improving onboarding so customers reach value quickly, proactive customer support, regular engagement and check-ins, and continuously shipping features that reinforce the product's value relative to its price.
Is customer churn the same as revenue churn?
No. Customer churn (sometimes called "logo churn") counts the number of customers lost, while revenue churn measures the dollar value lost — which can differ significantly if the customers who leave have different subscription values than average.
Why does churn rate matter more for subscription businesses?
Subscription and recurring-revenue businesses depend on customers staying for many billing cycles to recoup acquisition costs and become profitable. High churn undermines that entire model, making it a top-priority metric compared with one-time-purchase businesses.