How to Calculate Churn Rate

Two Types of Churn

Customer churn rate = customers who left ÷ customers at period start. Revenue churn rate = MRR lost from churn ÷ MRR at period start. For most SaaS teams, revenue churn is the primary metric because it reflects impact on the business.

Basic Formula

Monthly revenue churn rate = (Churned MRR in the month) ÷ (MRR at the start of the month). Express as a percentage. Example: $5K churned from $100K MRR = 5% monthly revenue churn.

Consistency Matters

Define “churn” clearly: e.g. cancellation date vs end of billing period. Exclude contraction (downgrades) from churn if you track them separately. Use the same period (monthly vs annual) and same definition across teams so trends are comparable.

Using Churn in Context

Track churn by segment, plan, and cohort to see where to focus. Combine with new and expansion MRR to get net revenue retention. Use churn rate for forecasting and goal-setting; use churn reasons (from exit surveys or support) to drive product and success actions.