How do you calculate customer churn rate?

Customer Churn Rate % = (Customers Lost ÷ Customers at Start of Period) × 100. Losing 20 of 500 customers in a month is a churn rate of (20 ÷ 500) × 100 = 4%.

Why isn't annualized churn just 12× the monthly rate?

Because churn compounds against a shrinking base each month. The correct formula is Annualized Churn % = (1 − (1 − Monthly Churn)^12) × 100. A 4% monthly churn compounds to roughly 38.7% annualized — noticeably less than a naive 48% (12 × 4%).

What's the difference between customer churn and revenue churn?

Customer churn counts accounts lost regardless of size. Revenue churn measures the dollar value lost as a percentage of starting MRR. A business can lose many small accounts (high customer churn) while losing little revenue, or lose one large enterprise account (low customer churn, high revenue churn) — the two numbers tell different stories.

What is a good churn rate for a SaaS company?

For small-to-mid market SaaS, 2%–5% monthly customer churn is generally considered healthy, with under 2% being excellent. Enterprise SaaS with longer contracts typically runs well under 1% monthly, since fewer, larger customers churn less frequently.

Churn Rate Calculator

(Customer & Revenue Churn Tool)

Calculate your monthly customer churn rate and a properly compounded annualized figure, plus optional MRR-based revenue churn since not every lost account is the same size.

Step 1 — Customer Churn

Customers at Start of Period

Customers Lost (Canceled)

Calculated Results

Enter starting customers and customers lost to calculate churn rate.

Related Calculators

💰

Ad Spend Budget Calculator

Plan daily and monthly ad spend budgets, pacing, and profit yields

📊

Facebook Ads ROI Calculator

Calculate net profit, ROI %, ROAS, and break-even targets for Meta ads

📈

ROAS Calculator

Calculate return on ad spend, ROI, and profit or loss from campaigns

⚖️

Break-Even ROAS Calculator

Find your minimum ad profitability threshold

🖱️

CPC Calculator

Calculate cost per click, spend requirements, or click volume

🎯

CPA Calculator

Calculate cost per acquisition, budget requirements, or conversion yields

Why Annualized Churn Isn't a Simple Multiplication

Churn rate measures how fast a business loses customers, and the naive shortcut of multiplying a monthly rate by 12 overstates the real annual damage. Because each month's churn applies to a smaller remaining base than the month before, the correct math compounds rather than multiplies.

Annualized Churn % = (1 − (1 − Monthly Churn %)^12) × 100

At 4% monthly churn, the naive estimate (12 × 4% = 48%) overstates the real compounded figure of roughly 38.7% — a meaningful difference when reporting churn to investors or a board.

Customer Churn vs. Revenue Churn

These two numbers can tell opposite stories. Losing 10 small $20/month accounts out of 500 customers produces high customer churn (2%) but tiny revenue impact ($200 of MRR). Losing one $5,000/month enterprise account out of the same 500 barely moves customer churn (0.2%) but can devastate revenue churn if that account was a large share of MRR.

Frequently Asked Questions (FAQ)

Most SaaS companies exclude free trials and free-tier accounts from churn calculations, reserving the metric for paying customers only — mixing in free users tends to inflate churn and dilute what the number is meant to signal about paid retention.

Churned MRR is one of the inputs to NRR, alongside expansion and contraction. See our Net Revenue Retention Calculator to see how churn nets out against upgrades from your existing customer base.