How to Calculate Churn Rate
What is Churn Rate?
Churn rate measures the percentage of customers or subscribers who stop using a product or service during a given time period. High churn destroys recurring revenue; reducing churn by just 1–2% can dramatically improve long-term revenue.
Step-by-Step Guide
- 1Count customers at the start of the period
- 2Count customers lost (cancelled, not renewed) during the period
- 3Churn rate = (Customers lost / Start customers) × 100%
- 4Monthly and annual churn compound — 5% monthly churn = 46% annual churn
Worked Examples
Input
1,000 customers start · 30 cancelled
Result
3% monthly churn
Healthy for B2C; high for B2B
Input
5% monthly churn
Result
46% annual churn
Nearly half your base gone each year
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