Churn Rate
The percentage of customers who stop buying over a period.
Formula
Variables
Example
50 lost / 1000 start = 5% churn
How it works
Churn rate measures how large a customer loss is relative to the size of the customer base at the beginning of a period. Dividing customers lost by the starting customer count turns the loss into a proportion, and multiplying by 100% converts that proportion into a percentage that is easy to compare across months, products, or companies. It works best when you want to know not just how many customers left, but how serious that loss was compared with the original base.
When to use it
Use this formula in subscription businesses, membership services, apps, telecoms, or any situation where customers can stop buying or cancel over time. It is especially useful for tracking retention, comparing performance across periods, or measuring the effect of a pricing or service change.
Worked example, step by step
Step 1: Identify the number of customers at the start of the month: 2,400 Step 2: Count the customers lost during the month: 96 Step 3: Substitute into the formula: Churn = (96 / 2,400) × 100% Step 4: Calculate the fraction: 96 / 2,400 = 0.04 Step 5: Convert to a percentage: 0.04 × 100% = 4% Final answer: The churn rate is 4%
Common mistakes to avoid
- Using the current number of customers instead of the starting number as the denominator
- Counting new customers gained during the period as part of churn
- Forgetting to multiply by 100% when the answer should be expressed as a percentage
Did You Know?
A 5% monthly churn quietly loses nearly half your customers over a single year.
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