CalculateY
Quick Answer
A company with 1,000 customers at the start of the month that loses 50 has a monthly churn rate of 5%, a retention rate of 95%, and an estimated average customer lifespan of 20 months.
Common Examples
| Input | Result |
|---|---|
| 1,000 start, 50 lost, monthly | 5.00% churn, 95.00% retention, 46.04% annual churn, 20.0 months avg lifespan |
| 500 start, 10 lost, monthly | 2.00% churn, 98.00% retention, 21.53% annual churn, 50.0 months avg lifespan |
| 2,000 start, 200 lost, annual | 10.00% churn, 90.00% retention, 10.00% annual churn, 10.0 years avg lifespan |
| 5,000 start, 150 lost, monthly | 3.00% churn, 97.00% retention, 30.64% annual churn, 33.3 months avg lifespan |
| 300 start, 3 lost, monthly | 1.00% churn, 99.00% retention, 11.36% annual churn, 100.0 months avg lifespan |
How It Works
This calculator uses the standard customer churn rate formula:
Churn Rate = (Customers Lost / Customers at Start of Period) x 100
Retention Rate = 100 - Churn Rate
Average Customer Lifespan = 1 / (Churn Rate / 100)
Where:
- Customers at Start = total active customers at the beginning of the period
- Customers Lost = customers who canceled or stopped paying during the period
- Churn Rate = percentage of customers lost in the period
- Retention Rate = percentage of customers retained in the period
- Average Customer Lifespan = estimated average number of periods a customer remains active
Monthly to Annual Conversion
Monthly churn does not simply multiply by 12 to get annual churn. The correct conversion uses compound probability:
Annual Churn Rate = (1 - (1 - Monthly Churn Rate / 100)^12) x 100
For example, a 5% monthly churn rate compounds to 1 - (1 - 0.05)^12 = 1 - 0.5404 = 45.96% annual churn, not 60%. This is because the customer base shrinks each month, so later months have fewer customers to lose.
Customer vs. Revenue Churn
This calculator measures customer churn (also called logo churn). Revenue churn tracks the dollar value of lost subscriptions, which may differ from customer churn if customers have different plan sizes. A company could have low customer churn but high revenue churn if its largest accounts are leaving.
Benchmarks
SaaS industry benchmarks vary by segment. Enterprise SaaS companies often target monthly churn below 1% (approximately 11% annual). SMB-focused SaaS companies may see 3% to 7% monthly churn. Consumer subscription services frequently experience 5% to 10% monthly churn or higher.
Worked Example
A subscription company starts the month with 1,000 active customers. During the month, 50 customers cancel. Churn rate = 50 / 1,000 x 100 = 5.00%. Retention rate = 100 - 5 = 95.00%. Annual churn rate = (1 - (1 - 0.05)^12) x 100 = (1 - 0.5404) x 100 = 45.96%. Average customer lifespan = 1 / 0.05 = 20 months. This means the average customer stays for approximately 20 months before churning, and nearly half the customer base would turn over annually at this rate.