Churn Rate Calculator
See your customer churn and revenue churn side by side — the gap between them tells you WHO is leaving — plus what churn costs you per year.
Written by Dorothy Ibrahim, 10+ years in banking & finance
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How we calculate this
This calculator measures customer churn and revenue churn side by side — and the gap between them is the insight: when revenue churn runs below customer churn you are losing small accounts, but when it runs above, your best customers are the ones leaving. It also compounds monthly churn into an annual retention figure, which is where a harmless-sounding monthly rate reveals its real cost, and prices the lost MRR per year.
The formulas
- Monthly customer churn
- customers lost this month ÷ customers at the start of the monthNew customers added during the month are excluded from the denominator — churn is measured against the starting base.
- Gross revenue churn
- MRR lost to churn ÷ MRR at start of month
- Net revenue churn
- (MRR lost to churn − expansion MRR) ÷ MRR at start of monthNegative net churn means upgrades from existing customers outgrow the losses.
- Annualized retention
- (1 − monthly customer churn) ^ 12
- Churn cost per year
- MRR lost this month × 12A deliberately naive projection — it assumes this month repeats and ignores compounding.
Worked example
- Say you started the month with 400 customers and $19,600 of MRR, lost 16 customers taking $900 of MRR with them, added 30 new customers, and booked $300 of expansion MRR from upgrades.
- Customer churn = 16 ÷ 400 = 4.0% for the month (the 30 new customers do not enter the calculation).
- Gross revenue churn = $900 ÷ $19,600 = 4.6%; net revenue churn = ($900 − $300) ÷ $19,600 = 3.1%.
- Revenue churn (4.6%) running above customer churn (4.0%) means the departing accounts are larger than average — the more dangerous direction.
- Compounded, 4%/month means keeping only 0.96^12 = 61.3% of today’s customers in a year, and the lost MRR annualizes to about $10,800.
Rates, benchmarks & sources
- Customer churn = lost ÷ starting base (new adds excluded); gross and net revenue churn over starting MRR; retention compounds as (1 − churn)^12 — Standard SaaS-metrics definitions
- Monthly customer-churn bands: under 3% healthy, 3–5% acceptable, 5–10% high, above 10% severe — Rule of thumb
Figures current as of 2026-07-02. See our methodology & editorial standards for how constants are versioned and verified.
What this tool doesn’t model
- One month is a noisy sample — a single billing hiccup or seasonal dip can double a small company’s churn rate; judge the trend over several months.
- The annualized figures assume this month’s churn rate holds for 12 straight months, which overstates the damage if churn is concentrated in new-customer onboarding.
- Counts customers equally in the customer-churn figure; the revenue-churn figures exist precisely because customers are not equal.
- The yearly cost figure (lost MRR × 12) is deliberately naive — it ignores the compounding loss of customers who would have expanded, referred others, or renewed for years.
- Does not distinguish voluntary churn (cancellations) from involuntary churn (failed payments), which have completely different fixes.
Frequently asked questions
What is a good monthly churn rate?
As a rule of thumb: under 3% per month is healthy, 3–5% is acceptable, 5–10% is high, and above 10% is severe. These are heuristics — tolerable churn depends on price point and market (SMB customers churn faster than enterprise). The compounding view keeps you honest: even an "acceptable" 4% monthly rate means losing nearly 40% of your customer base within a year.
Why do customer churn and revenue churn diverge, and which matters more?
They diverge because customers are different sizes. Revenue churn below customer churn means the leavers are mostly small accounts — painful but survivable. Revenue churn above customer churn means your largest, best customers are the ones walking out, which is an all-hands problem: whatever is failing is failing for exactly the accounts you can least afford to lose. Watch both, but react hardest to the second pattern.
What is net negative churn?
Net revenue churn goes negative when expansion MRR from existing customers — upgrades, seat additions, plan changes — exceeds the MRR lost to cancellations. In that state your revenue grows even if you add zero new customers, which is why it is often called the gold standard for subscription businesses: growth stops depending entirely on acquisition.
Why are new customers excluded from the churn calculation?
Because mixing them in makes churn look artificially low during growth. If you start with 400 customers, lose 16, and add 30, dividing losses by the end-of-month 414 would understate churn — and fast growth could mask serious retention problems entirely. Measuring losses against the starting base isolates the question churn is meant to answer: of the customers you had, how many did you keep?
How much does churn actually cost me per year?
The tool shows a deliberately simple floor: this month’s lost MRR × 12 — about $10,800 at the defaults. The true cost is higher, because each churned customer also takes future expansion revenue, referrals, and renewal years with them. Even the naive number is usually enough to justify retention work: compare it to what you spend acquiring the replacement customers.
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themoneysheet provides educational estimates, not financial, tax, or legal advice. Figures use published rates and formulas current as of the date shown, but your situation may differ. Consult a qualified professional (CPA, attorney, or licensed advisor) before making financial decisions.