Churn Rate
Churn rate is the share of customers lost during a period relative to those at the start.
Formula
Variables
Example
25 lost of 500: c = 5%
How it works
Churn rate measures what fraction of the starting customer base disappeared during a chosen period, expressed as a percentage. It works by comparing the number of customers lost to the number the business had at the beginning, so the result shows how large the loss was relative to the original base. Multiplying by 100% converts that fraction into a percent, which makes it easier to compare across different-sized businesses or time periods.
When to use it
Use this when tracking customer retention for subscription services, memberships, or any business where customers can leave over time. It is especially useful for comparing monthly, quarterly, or annual losses between different products, locations, or cohorts.
Worked example, step by step
A streaming service starts the month with 2,000 customers. By the end of the month, 90 customers have cancelled. Use c = (C_lost / C_start) × 100% Substitute the values: c = (90 / 2,000) × 100% Compute the fraction: 90 ÷ 2,000 = 0.045 Convert to a percentage: 0.045 × 100% = 4.5% Final answer: the churn rate is 4.5%
Common mistakes to avoid
- Using the number of customers at the end instead of the number at the start
- Forgetting to convert the ratio into a percentage
- Counting new customers gained during the period as if they reduce churn
Did You Know?
Even small monthly churn compounds — 5% a month loses nearly half your customers in a year.
Share this formula
More in Revenue & Sales
View allTotal Revenue
BasicTotal revenue is the selling price multiplied by the number of units sold.
Net Revenue
BasicNet revenue is gross revenue less returns, refunds and discounts — the amount actually recognised.
Average Revenue
BasicAverage revenue is total revenue divided by units sold — equal to price per unit in a single-price market.
Marginal Revenue
IntermediateMarginal revenue is the extra revenue earned from selling one additional unit.
Revenue Growth Rate
BasicThe percentage change in revenue from one period to the next.
Monthly Recurring Revenue
IntermediateMonthly recurring revenue is the number of active subscribers times average revenue per user per month.