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How to calculate churn rate
Churn rate is the share of customers who leave during a set period. Monthly is the standard for subscription businesses because it catches problems while you can still do something about them.
The formula:
Churn rate = (Customers lost during the period ÷ Customers at the start of the period) × 100
Worked example:
You start the month with 1,200 customers and lose 42. Your average account is worth $180 per month.
- 42 ÷ 1,200 = 0.035
- 0.035 × 100 = 3.5% monthly churn
- 42 × $180 = $7,560 in lost monthly recurring revenue
That $7,560 is not a one-time loss. It is gone every month from now on, which is roughly $90,000 off your annual run rate from a single month of churn.
Use the starting count, not the ending count. Customers you acquired this month have not had a fair chance to leave yet. Including them in the denominator makes your churn look better than it is, and it makes month-to-month comparison meaningless during periods of fast growth.
Monthly churn does not multiply by twelve
This is the mistake that makes churn look survivable when it is not.
Annual churn compounds, because each month you are losing a percentage of a base that already shrank. The formula is 1 − (1 − monthly rate)^12, not monthly × 12.
| Monthly churn | Annual churn | Average customer lifespan |
|---|---|---|
| 1% | 11% | 100 months |
| 2% | 22% | 50 months |
| 3% | 31% | 33 months |
| 5% | 46% | 20 months |
| 7% | 58% | 14 months |
At 5% monthly you replace nearly half your customer base every year just to stand still. That is the number to bring to a budget conversation, because it reframes retention spend as cheaper than the acquisition it replaces. The same logic runs through your cost per thousand impressions and every other acquisition metric: a leaky bucket makes every channel look more expensive than it is.
Customer churn and revenue churn are different numbers
This calculator measures customer churn, also called logo churn. It counts accounts, not dollars.
- Customer churn is how many accounts left.
- Gross revenue churn is how much recurring revenue left, including downgrades.
- Net revenue retention is revenue churn offset by upgrades and expansion from the customers who stayed.
They can point in opposite directions, and that is the useful part. Losing your ten smallest accounts and losing one enterprise account can produce identical customer churn and wildly different damage. If your customer churn looks fine but revenue is flat, you are losing the wrong customers.
Median net revenue retention across B2B SaaS sits near 106%, and companies above 100% grow from their existing base without selling anything new.
What is a good churn rate?
There is no single answer, and any page that gives you one is quoting a dataset that does not look like your business. Segment matters more than stage.
Monthly logo churn benchmarks, 2026:
| Segment | Typical monthly churn | Equivalent annual |
|---|---|---|
| SMB and prosumer | 3% to 7% | 31% to 58% |
| Mid-market | 1.5% to 3% | 17% to 31% |
| Enterprise | Under 1% to 2% | 11% to 22% |
| Best in class | Under 1% | Under 11% |
Last updated: [Month Year]
Two things to hold onto. First, the widely repeated “under 5% annual churn is good” line comes from enterprise-weighted data and is an unreachable target for most SMB products. Second, contract structure moves this as much as company size does. Monthly billing churns far harder than annual billing at the same price point, because there are twelve decision points a year instead of one.
Vertical matters too. Cybersecurity and healthcare tend to be stickiest thanks to compliance switching costs, while martech is consistently among the leakiest categories.
How to read your lost revenue number
The calculator multiplies churned customers by your average account value. That is the right estimate to start with and the wrong one to stop at, for three reasons:
- Churned customers skew below average. Small accounts leave more often than large ones, so this figure usually overstates the damage in businesses with a wide pricing spread.
- It misses downgrades entirely. A customer who cut their plan in half is invisible to a customer churn calculation while doing real revenue damage.
- It ignores expansion. If your remaining customers grew, net revenue retention may be healthy even in a bad churn month.
Use this output for direction and urgency. For a board number, pull actual MRR lost from billing and separate voluntary from involuntary churn. Involuntary churn from failed payments is often a meaningful slice of the total and it is the cheapest kind to fix, since it is a billing and data problem rather than a product one.
What actually causes churn
Most churn traces back to four things, in rough order of how much revenue they move:
- Onboarding. Customers who never reach first value leave in the first ninety days and rarely tell you why. Early-life churn is an activation problem wearing a retention costume.
- Unrealized value. The product works, but nobody at the account can point to what it did. This is where lifecycle and retention email earns its keep, by making the value visible on a schedule rather than hoping someone logs in.
- Failed payments. Expired cards and declined charges churn customers who never intended to leave. Dunning recovers a large share of it.
- Wrong-fit acquisition. If a channel brings in customers who churn at twice the rate, that channel is more expensive than its cost per acquisition suggests. Segment churn by acquisition source before you scale spend.
The first and last are the ones marketing controls directly, and they are usually the two nobody measures.
How to reduce churn
- Segment before you act. Blended churn hides everything. Split by plan, by segment, and by acquisition channel, and the problem usually turns out to live in one cohort.
- Fix onboarding first. It is the cheapest intervention with the largest effect, because it compounds across every future cohort.
- Instrument the leading indicators. Login frequency, feature depth, and support ticket volume predict churn weeks before the cancellation. That requires event tracking that is actually reliable.
- Attack involuntary churn separately. Card retries, pre-expiry reminders, and grace periods recover revenue with no product work at all.
- Ask the ones who leave. A two-question exit survey outperforms most retention analytics, and almost nobody runs one.
Compare your result against the rest of your funnel using our other free analytics tools.
Frequently asked questions
How do I calculate churn rate?
Divide customers lost during the period by customers at the start of the period, then multiply by 100. Losing 42 customers from a starting base of 1,200 is 3.5% monthly churn.
What is a good monthly churn rate?
It depends on who you sell to. SMB products commonly run 3% to 7% monthly, mid-market 1.5% to 3%, and enterprise under 2%. Compare yourself to your segment, not to an industry average.
Should I measure churn monthly or annually?
Monthly, if you bill monthly. Annual churn is the number for investors and forecasting, but monthly is the one you can still act on. Convert with 1 − (1 − monthly)^12 rather than multiplying by twelve.
What is the difference between churn rate and retention rate?
They are two views of the same thing. Retention rate is 100% minus your churn rate. Retention is the more useful frame when you are reporting progress, because the number moves in the direction you want.
Does this calculator measure revenue churn?
It estimates it. The lost revenue output multiplies churned accounts by your average account value, so it will not capture downgrades or the fact that departing customers tend to be smaller than average. For exact revenue churn, use actual MRR from your billing system.
What is negative churn?
When expansion revenue from existing customers exceeds the revenue lost to cancellations and downgrades. Net revenue retention above 100% means the customer base grows in value even as some accounts leave.
Frequently asked questions
How do I calculate churn rate?
Divide customers lost during the period by customers at the start of the period, then multiply by 100. Losing 42 customers from a starting base of 1,200 is 3.5% monthly churn.
What is a good monthly churn rate?
It depends on who you sell to. SMB products commonly run 3% to 7% monthly, mid-market 1.5% to 3%, and enterprise under 2%. Compare yourself to your segment, not to an industry average.
Should I measure churn monthly or annually?
Monthly, if you bill monthly. Annual churn is the number for investors and forecasting, but monthly is the one you can still act on. Convert with 1 − (1 − monthly)^12 rather than multiplying by twelve.
What is the difference between churn rate and retention rate?
They are two views of the same thing. Retention rate is 100% minus your churn rate. Retention is the more useful frame when you are reporting progress, because the number moves in the direction you want.
Does this calculator measure revenue churn?
It estimates it. The lost revenue output multiplies churned accounts by your average account value, so it will not capture downgrades or the fact that departing customers tend to be smaller than average. For exact revenue churn, use actual MRR from your billing system.
What is negative churn?
When expansion revenue from existing customers exceeds the revenue lost to cancellations and downgrades. Net revenue retention above 100% means the customer base grows in value even as some accounts leave.
Churn is a marketing problem more often than anyone admits
Wrong-fit customers come from somewhere, and unrealized value is a communication failure before it is a product one. Launchcodex builds lifecycle programs and the tracking underneath them, so you can see which channels bring customers who stay.
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