What Is Churn Rate?

Churn rate measures the percentage of customers who cancel or stop using a service in a given period. For subscription businesses and SaaS companies, churn is the single most important metric after growth — even a small churn rate compounds into massive customer base erosion over time. This churn rate calculator computes monthly churn, customer lifetime, LTV, and revenue at risk.

Churn Rate Formulas

Monthly Churn Rate = (Customers Lost ÷ Starting Customers) × 100. Average Customer Lifetime = 1 ÷ Monthly Churn Rate. Customer LTV = (ARPU × Gross Margin %) ÷ Monthly Churn Rate. Revenue Churn = (MRR Lost ÷ Starting MRR) × 100.

The Compounding Impact of Churn

A 2% monthly churn means losing 22% of customers per year. At 5% monthly churn, you lose 46% annually. This means you must acquire nearly half your customer base every year just to stay flat. Reducing churn by 1 percentage point often has more financial impact than a 20% increase in new customer acquisition.

Net Revenue Retention (NRR)

The best SaaS companies achieve NRR above 120% — meaning existing customers spend more over time through upsells and expansion even as some churn. This creates a flywheel where organic growth from existing customers supplements new customer acquisition. Companies with NRR above 130% include Snowflake, Twilio, and Datadog at their peaks.