Here's the mistake I see most often with churn.
An owner tells me they lose 3% of customers a month, so "about 36% a year." It sounds like simple maths. It's wrong, and it's wrong in a way that matters, because churn compounds. This calculator does the maths properly and shows you what the number means in customers and dollars.
How to use the churn calculator
- Choose whether your numbers cover a month, quarter or year. The calculator converts everything to a monthly rate so you can compare like with like.
- Enter the customers you started with, the new ones you won and the ones you lost. Only count lost customers from the starting group.
- For revenue churn, enter your starting MRR and the MRR lost to cancellations and downgrades, plus any expansion (upgrades) from existing customers.
- Pick an industry to compare with.
How the maths works
Customer churn rate = Customers lost ÷ Customers at the start Monthly rate from a longer period = 1 − (1 − period rate)^(1 ÷ months) Annual churn = 1 − (1 − monthly churn)^12 Average lifetime (months) = 1 ÷ monthly churn Gross revenue churn = (Churned MRR + Contraction MRR) ÷ Starting MRR Net revenue churn = (Churned + Contraction − Expansion) ÷ Starting MRR
Annual churn isn't monthly churn × 12, because each month you lose a share of a smaller base. GRR and NRR are annualized the same way: a monthly rate kept for twelve months.
A worked example
The calculator opens with a business that starts the month with 500 customers and $25,000 of MRR.
It loses 18 customers: 18 ÷ 500 = 3.6% a month. Over a year that compounds to 35.6%, not 43%. The average customer stays 1 ÷ 0.036, about 28 months, and the business needs 18 new customers every month just to stand still.
On revenue, it loses $700 to cancellations and $150 to downgrades. That's 3.4% gross revenue churn. Upgrades bring back $400, so net revenue churn is 1.8%. Kept up for a year, that's GRR of about 66% and NRR of about 80%. In dollars, today's customers will be paying about $8,500 less a month in a year's time.
What good looks like
Our churn benchmarks guide uses these rule-of-thumb bands for monthly customer churn: under 1% excellent, 1% to 2% strong, 2% to 4% normal for consumer and self-serve, 4% to 6% worth investigating, and over 6% a problem to fix before you spend more on acquisition.
For industry comparisons, the calculator uses Recurly's July 2026 network medians: 3.22% for SaaS, 3.44% for business services, 4.25% for e-commerce, 4.99% for education and 3.60% across all industries. Recurly describes them as annual medians, but they sit close to the monthly churn other sources report, so treat them as monthly reference points.
For B2B software, revenue retention matters more than logo counts. SaaS Capital's 2025 survey put median GRR for private B2B SaaS at 91% and NRR at 101%.
Price matters too. Recurly's data shows churn falling as price rises, mostly because failed payments drop sharply. Compare yourself with businesses at your price point.
What to do next
- Read how to calculate churn rate properly, including the cohort method.
- If more than a third of your churn is failed payments, start with involuntary churn. It's the cheapest churn to fix.
- Work through the book's chapter on how to reduce churn, then run the Churn Risk Checklist to find your biggest leak.
- See what a longer customer life is worth with the LTV Calculator.
Frequently asked questions
Is 5% monthly churn bad?
For most businesses, yes. At 5% a month you lose about 46% of your customers in a year, so nearly half your base has to be replaced just to stand still. Some low-priced consumer subscriptions live with it because winning customers is cheap. For business software or a high-touch service, 5% a month usually points to an onboarding or customer-fit problem worth fixing first.
Should I count customers who joined during the month?
Not in the standard formula. Churn rate divides customers lost by customers at the start of the period, and only counts losses from that starting group. New customers who join and leave in the same month are best tracked separately as an onboarding problem. Some analysts divide by the average number of customers instead. Either is fine if you stay consistent.
What's the difference between customer churn and revenue churn?
Customer churn counts people. Revenue churn counts dollars. If your biggest customers stay and small ones leave, revenue churn will be lower than customer churn, and the reverse is a warning sign. Revenue churn also includes downgrades. Track both, and add net revenue churn, which subtracts upgrades, to see whether existing customers are growing or shrinking overall.
How does churn affect the value of my business?
Directly. Lower churn means each customer stays longer, so lifetime value and future revenue are higher and more predictable. Buyers of subscription businesses pay more for revenue that renews, and they discount businesses where customers leave fast. Cutting churn is often the quickest way to lift what a business is worth before a sale.
What counts as involuntary churn?
Involuntary churn is customers lost because a payment failed, not because they chose to leave: expired cards, insufficient funds or bank declines. Recurly's July 2026 data puts it at about 1.25% a month across industries, roughly a third of all churn. Card updaters, smart retries and dunning emails can recover much of it.
Built on The Subscription Playbook
This tool turns frameworks from Robert Coorey's book into something you can use in minutes. Robert is the author of The Subscription Playbook and a Director at BPAG Accountants. More about Robert.