Customer Churn Rate
What is Customer Churn?
Customer Churn measures the percentage of customer accounts lost over a given period.
Customer churn counts accounts lost from a defined starting customer base. It gives every account the same weight, which makes it useful for investigating product retention. Revenue retention answers a separate question about the size of those losses. The calculator works it out from starting and cancelled customer counts, or converts a known monthly rate into an annualized loss rate and a simplified lifetime estimate.
Also known as: Churn, Churn Rate, Existing Customer Churn, Monthly Account Churn
Formula
Monthly Customer Churn = Customers Lost During Month / Customers at Start of Month | Variable | Meaning |
|---|---|
Customers Lost During Month | Accounts that cancelled during the month. |
Customers at Start of Month | Active customer accounts at the start of the month. |
How to use it
- Record paying accounts active at the start of the month. Exclude free trials and customers first acquired during that month from the opening cohort.
- Count opening accounts that churn during the month and divide by starting accounts. Report any later reactivations separately; do not subtract returning accounts from the churned count.
- Enter the starting and cancelled counts in the calculator, or switch it to Annualize a monthly rate. Use the annualized output as a constant-rate scenario, then compare it with actual annual cohort retention.
Worked example
Hypothetical worked scenario
A fictional business starts with 500 paying accounts and loses 10 of those accounts in a month. New sign-ups during that month are tracked separately.
Monthly churn = 10 ÷ 500 = 2%. If that rate persists, annual loss = 1 − (1 − 0.02)^12 ≈ 21.5%. The simple lifetime estimate is 1 ÷ 0.02 = 50 months.
Multiplying 2% by 12 gives 24%, which ignores the shrinking remaining cohort. The 50-month figure is a model output, not evidence that observed customers actually stay that long.
Calculate with your numbers
Monthly Customer Churn = Customers Lost During Month / Customers at Start of Month | Variable | Meaning |
|---|---|
Customers Lost During Month | Accounts that cancelled during the month. |
Customers at Start of Month | Active customer accounts at the start of the month. |
Worked example
- Paying customers at the start of the month
- 100
- Of those, customers who cancelled during the month
- 5
- Customers who came back during the month (optional)
- 2
- → Customer churn for the month
- 5%
- → Reactivated customers, reported separately
- 2
Enable JavaScript to use the interactive calculator.
Open the Customer Churn calculator for a focused view of the inputs.
What the result tells you
Break churn into acquisition cohorts, plans, and reasons for leaving. Review voluntary cancellations separately from failed payments. A single large customer leaving can have little effect on account churn but a large effect on revenue; read both reports before setting priorities.
Assumptions and common mistakes
- Monthly and annual percentages are not directly comparable. Label the observation interval.
- Annualization assumes the monthly rate stays constant; seasonal renewals or annual contracts can violate that assumption.
- Zero churn in a small or young cohort does not establish an infinite lifetime.
Check how your team defines Customer Churn against these rules.
Compare related measures
Frequently asked questions
Does this calculator count lost customers?
It takes an already calculated monthly churn percentage. Calculate that percentage from a fixed starting customer cohort first; the guide’s scenario shows the count-based step.
Should reactivated customers offset churn?
No. Report reactivated customers in their own bucket and do not subtract them from churned accounts. If 100 accounts start the month, 5 churn, and 2 return, customer churn is 5 ÷ 100 = 5%, not 3%.
Sources and methodology
The references below explain the underlying methods. Our worked scenarios use hypothetical figures; they are not company results or current market benchmarks.
- ChartMogul: Customer churn rate
Cohort scope and customer counting conventions.
Found an error or a definition that differs from your reporting? Send a correction with the page URL and the method you use.