How do you calculate churn rate?

Divide the customers you lost during the period by the customers you had at the start, then multiply by 100. 12 cancellations from 400 customers at the start of the month is 12 ÷ 400 × 100 = 3% monthly churn.

What is a good churn rate?

It depends on who you sell to, the contract length and the price, so the most useful comparison is your own trend and the same segment over time. Before comparing any two rates, make sure they cover the same period: convert monthly and annual figures first, because 3% a month is about 30.6% a year.

How do you convert monthly churn to annual churn?

Annual churn = 1 − (1 − monthly churn)^12. At 2% a month: 1 − 0.98^12 = 21.5% a year. Multiplying by 12 (24%) overstates it, because each month's churn applies only to the customers who are left. The converter on this page works both ways.

What is the difference between NRR and GRR?

Both start from the recurring revenue of existing customers. Gross revenue retention (GRR) subtracts churned and contraction revenue only, so it is 100% at most. Net revenue retention (NRR) also adds expansion revenue, so it can go above 100% when upgrades outweigh losses.

Should new customers count in the churn rate?

Not in the denominator. The rate measures how many of the customers you had at the start you lost, so customers who joined during the period stay out. Report them as new customers, and count any who cancel the same period consistently, either as lost now or next period.

Churn Rate Calculator

Enter the customers you had at the start of a period and how many you lost. Add recurring revenue if you track it. You get customer churn and retention, revenue churn, net and gross revenue retention, the monthly and annual equivalents, an estimate of customer lifetime and what happens to 100 customers over 12 periods.

Period and customers

Period

Customers at the start

Customers lost

New customers (optional)

Shown in the end count only. They were not there at the start, so they stay out of the rate.

Revenue (optional)

Monthly recurring revenue for the same period. Leave it empty for customer churn only.

MRR at the start

$

Churned MRR

$

Contraction MRR (downgrades)

$

Expansion MRR (upgrades)

$

Results

Customer churn rate

3.00%

12 ÷ 400 × 100 = 3.00%

Customer retention

97.00%

Monthly churn

3.00%

Annual churn

30.62%

Compounded, not × 12

Average customer lifetime

33.3 months (2.8 years)

1 ÷ monthly churn. A simple estimate that assumes the rate stays the same.

Turn the lifetime into customer lifetime value

Revenue churn and retention

Gross revenue churn

3.50%

(churned + contraction) ÷ starting MRR

Gross revenue retention (GRR)

96.50%

(start − churned − contraction) ÷ start

Net revenue retention (NRR)

101.00%

(start + expansion − contraction − churned) ÷ start: $40,400 ÷ $40,000

Net revenue churn

-1.00%

Below zero: net negative churn. Expansion outgrew what you lost.

Monthly and annual churn converter

Churn compounds: each month's rate applies to the customers who are left. That is why 3% a month is about 30.6% a year, not 36%.

Convert

Churn rate

%

Annual churn

30.62%

100 customers over 12 periods

At 3.00% churn a month, starting with 100 customers. Fractions show the average.

	Customers left	Lost in the period	Retained
Start	100	–	100.0%
Month 1	97	3	97.0%
Month 2	94.1	2.9	94.1%
Month 3	91.3	2.8	91.3%
Month 4	88.5	2.7	88.5%
Month 5	85.9	2.7	85.9%
Month 6	83.3	2.6	83.3%
Month 7	80.8	2.5	80.8%
Month 8	78.4	2.4	78.4%
Month 9	76	2.4	76.0%
Month 10	73.7	2.3	73.7%
Month 11	71.5	2.2	71.5%
Month 12	69.4	2.1	69.4%

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How to calculate churn rate

Customer churn rate = customers lost during the period ÷ customers at the start of the period × 100. Retention is the rest: 100% minus churn.

Example: you start the month with 400 customers and 12 cancel. Churn is 12 ÷ 400 × 100 = 3%, and retention is 97%.

Customers who signed up during the period stay out of the calculation: they were not there at the start, so they cannot be part of the base you lost from. If some of them cancel in the same month, count them as lost or leave them for next month, and do it the same way every time. Some teams divide by the average number of customers instead; whichever you use, name it when you report the rate.

Customer churn vs revenue churn

Customer churn counts accounts. Revenue churn counts money, which matters when customers pay very different amounts: losing one large account can hurt more than losing ten small ones, and a customer who downgrades still counts as retained even though revenue fell.

Gross revenue churn = (churned MRR + contraction MRR) ÷ MRR at the start × 100. With $40,000 of MRR at the start, $1,000 from customers who cancelled and $400 from downgrades, gross revenue churn is $1,400 ÷ $40,000 = 3.5%.

Net revenue retention and gross revenue retention

Net revenue retention (NRR) = (MRR at the start + expansion − contraction − churned) ÷ MRR at the start × 100. It answers: of the revenue we had from existing customers, how much do we have now, upgrades included? In the example, $1,800 of upgrades gives ($40,000 + $1,800 − $400 − $1,000) ÷ $40,000 = 101%.

Gross revenue retention (GRR) leaves expansion out: ($40,000 − $1,000 − $400) ÷ $40,000 = 96.5%. GRR can never go above 100%; NRR can. When NRR is above 100%, net revenue churn is negative (−1% here), which is called net negative churn: existing customers grew faster than you lost revenue.

Both use the starting MRR of existing customers only. New customers' revenue belongs in new MRR, not in retention. To see the whole month's movement, new business included, use the MRR and ARR calculator.

Monthly vs annual churn

Churn compounds. Each month's rate applies to the customers who are still there, so a monthly rate does not multiply by 12. Annual churn = 1 − (1 − monthly churn)^12. At 3% a month: 1 − 0.97^12 = 30.6% a year, not 36%.

The other way: monthly churn = 1 − (1 − annual churn)^(1/12). A 5% annual churn is about 0.43% a month. The calculator converts quarterly and custom periods the same way, so you can compare rates measured over different periods.

Churn and customer lifetime

A common shortcut: average customer lifetime = 1 ÷ churn rate per period. At 3% a month, that is 1 ÷ 0.03 = 33.3 months. It is a simple estimate that assumes the rate stays the same over a customer's whole life; check it against how long your customers really stay.

To turn the lifetime into customer lifetime value, with gross margin and the LTV:CAC ratio, use the customer lifetime value calculator.

This page is about customers who stop paying. For employees who leave, use the turnover rate calculator.

The results are planning numbers built from what you enter. Companies count churn in slightly different ways (paused accounts, downgrades to a free plan, the denominator); say which rules you used when you report a rate.

The rate says how many left. Renewal calls say why.

Why customers leave or shrink comes out in renewal, QBR and exit calls: the feature that never landed, the champion who moved on, the budget that went elsewhere. Record those calls in ParrotNotes and get the summary and action items, so the pattern behind the churn is visible across accounts. Free for 100 minutes of recording a month.

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