How to calculate churn
Divide losses by the starting customer base.
Use the starting base
Count customers active at the beginning of the period.
Count cancellations
Include voluntary and involuntary losses in the same period.
Annualize carefully
Compounding makes annual churn higher than a simple multiple of the monthly rate.
What does this tool do?
Churn rate measures the customers who leave during a period as a share of those present at the start. Annualizing a monthly rate helps compare retention across periods and shows how quickly a customer base would erode.
The Formula
Churn rate = Customers lost ÷ Starting customers × 100Frequently Asked Questions
Why is annualized churn higher than monthly churn times 12?
Churn compounds: each month a smaller customer base is exposed to further losses. The annualized figure accounts for that compounding and is the comparable number.
Does churn include customers who downgrade?
Logo churn does not. A downgrade keeps the customer but reduces revenue, which shows up in net revenue retention rather than customer churn.