What this calculator measures
Churn is the rate at which a subscription business loses what it already won. This calculator computes both flavours from the same month: customer churn (accounts lost as a share of the starting base) and revenue churn (MRR lost to cancellations as a share of starting MRR). It then annualises each one properly, which is where most spreadsheets go wrong.
The formulas
Revenue churn = churned MRR ÷ MRR at start
Annualised churn = 1 − (1 − monthly churn)12
Only the base you started with counts. Customers signed during the month belong to next month’s denominator; mixing them in lets fast acquisition mask genuine churn, which is precisely the failure mode churn exists to catch.
Worked example
A company starts the month with 500 customers and $48,000 MRR. It loses 12 customers taking $1,150 of MRR with them. Customer churn = 12 ÷ 500 = 2.4%; revenue churn = $1,150 ÷ $48,000 = 2.4%. Annualised, 2.4% monthly compounds to about 25% — a quarter of the base gone in a year if nothing changes.
What good looks like
Churn tolerances depend almost entirely on who you sell to. SMB and prosumer products typically run 3–7% monthly customer churn — small businesses fail and switch constantly. Mid-market SaaS should sit at 1–2.5% monthly. Enterprise products are measured annually: 5–10% annual gross revenue churn is solid, and the best run under 5%. Revenue churn below customer churn is the healthy pattern (small accounts leaving, large ones staying); the reverse deserves an immediate investigation. Segment ranges are on the benchmarks page.
Common mistakes
- Annualising by multiplying by 12. Churn compounds against a shrinking base: 5% monthly is 46% annually, not 60%.
- Counting downgrades as churn. A customer who drops a tier but stays is contraction. Blending the two hides which problem you actually have.
- Measuring monthly churn on annual contracts. Annual customers can only leave at renewal, so their monthly churn is structurally near zero. Measure annual-contract cohorts on renewal rates instead.
- Ignoring the divergence. When customer churn and revenue churn split apart, that gap is the diagnosis — see logo churn.
FAQ
Do new customers count in the churn calculation?
No. Churn is measured against the base you started the period with. Customers acquired during the period are excluded from both numerator and denominator — otherwise fast acquisition mathematically hides real churn.
Why is annual churn not just monthly churn times twelve?
Because the base shrinks each month, churn compounds. Annual churn = 1 − (1 − monthly churn)12. At 5% monthly that is about 46%, not 60% — the naive multiplication overstates it.
Which matters more, customer churn or revenue churn?
They answer different questions. Customer churn measures how broadly the product sticks; revenue churn measures financial damage. If they diverge, the gap tells you which size of customer is leaving — big accounts leaving shows up in revenue churn first.