Know the Figures

Churn Rate Calculator & Monthly ↔ Annual Converter

Work out churn from customer counts, and convert monthly to annual without the 12× error.

Replaces: SaaS metrics dashboards

How to use it

Enter how many customers you started a period with and how many of them left, or a monthly or annual churn rate you already have. Add the recurring revenue at the start of a month and the revenue lost to cancellations to compare customer churn with revenue churn.

Where the number comes from

  • Customer churn for a period is customers lost ÷ customers at the start. Customers won during the period are left out of both figures.
  • A period longer than a month is turned into the monthly rate that loses the same share when compounded: 1 − (1 − period churn)^(1 ÷ months).
  • Annual churn is 1 − (1 − monthly churn)^12: each month’s rate applies only to customers still left. Going the other way, monthly churn is 1 − (1 − annual churn)^(1/12).
  • The naive annual figure is 12 × monthly churn, shown with the number of points by which it overstates the compounded figure.
  • Average customer lifetime is 1 ÷ monthly churn. Revenue churn is MRR lost ÷ MRR at the start, annualised the same way.

What goes wrong

The part most calculators leave out.

  • Dividing by the customer count at the end of the period, or by start plus new customers, makes churn look lower — and lower still the faster the business is growing. The rate here uses only the starting count.
  • A single month is noisy. One large account, a billing-run failure or annual renewals bunched into one month can double or halve the figure; average several months before converting.
  • Average lifetime from 1 ÷ churn assumes the rate is constant. Real churn is usually highest in the first months and lower among customers who stay, so the average hides two very different groups.
  • Customers on annual contracts can only leave at renewal. Their monthly churn is near zero for eleven months and spikes in the twelfth, so converting one month to a year misstates it either way.
  • Revenue churn here counts cancellations only. Including downgrades, or netting off expansion, measures something different, and comparing that with customer churn misreads which customers are leaving.

Why 3.5% a month is not 42% a year

A business starts the month with 1,200 customers and loses 42: monthly churn of 3.5%. Multiplying by 12 gives 42% a year, but each month’s 3.5% falls on a smaller group — of every 100 customers, 65.2 are still there after a year, so annual churn is 34.8%, 7.2 points below the shortcut. At that rate the average customer stays 28.6 months. Revenue tells a slightly different story: 3,800 of 120,000 MRR lost is 3.17% a month, lower than customer churn, so the customers who left were smaller than average. Had the 60 new customers been added to the denominator, churn would have read 3.33%.

Questions

How do I convert monthly churn to annual churn?
Annual churn is 1 − (1 − monthly churn)^12. At 3.5% a month that is 1 − 0.965^12, about 34.8%, not the 42% that twelve times the monthly figure suggests. The gap grows with the rate.
How do I convert annual churn to monthly churn?
Monthly churn is 1 − (1 − annual churn)^(1/12). An annual rate of 35% is about 3.53% a month — more than 35% ÷ 12, which is 2.92%.
What is the difference between customer churn and revenue churn?
Customer (logo) churn counts accounts; revenue churn weighs them by what they paid. When revenue churn is higher, larger customers are leaving; when it is lower, the losses are concentrated among small accounts.
Should new customers be included when calculating churn?
Not in the denominator for the period. Customers who joined part-way through had little or no time to leave, so including them dilutes the rate. Measure churn against the customers you had at the start.
Does anything I type get sent anywhere?
No. The whole calculation runs in your browser. Nothing is sent to us or logged, and there is no account to create. Your browser keeps the figures with this tab’s history so that Back and Reload bring them back, and Reset clears them.

Last updated .

Put this calculator on your site

Free to embed, on any site, commercial or not. No sign-up and no tracking script — the calculator runs in your reader’s browser exactly as it does here. All we ask is that you keep the credit line.

HTML

The small script resizes the frame as the reader changes inputs. Drop it if your CMS strips scripts — the calculator still works, it will just stay at a fixed height. The calculator is light by default; on a dark site, end the src with ?theme=dark, or ?theme=auto to follow each reader’s device.

Related calculators