How to Calculate Churn Rate (SaaS Guide)

Q: How do you calculate churn rate?

Divide the number of customers lost during a period by the number of customers at the start of that period, then multiply by 100. For example, losing 6 customers out of 80 gives you a 7.5% monthly churn rate. Use customers at the start of the period as the denominator — never include mid-period signups.

Q: What is a good churn rate for SaaS?

For SMB SaaS products, 3–5% monthly churn is typical, and under 3% is strong. Enterprise products with annual contracts often see below 1% monthly. Your target depends on your average contract value and billing cycle, but if you're above 5% monthly, you have a retention problem that growth alone won't solve.

Q: What is the difference between customer churn and revenue churn?

Customer churn counts the percentage of accounts lost, treating every customer equally regardless of what they pay. Revenue churn measures the percentage of MRR lost, weighting high-value customers more heavily. A product with low customer churn but high revenue churn is losing its best customers — which is worse than the headline number suggests.

Q: How do you convert monthly churn to annual churn?

Use the compounding formula: Annual Churn = 1 minus (1 minus Monthly Churn Rate) raised to the power of 12. Do not multiply monthly churn by 12 — that overstates the annual figure. A 5% monthly churn rate compounds to roughly 46% annual churn, not 60%. --- > Stop calculating churn in spreadsheets. NoNoiseMetrics computes customer and revenue churn from your Stripe data automatically — [free up to €10k MRR →](https://app.nonoisemetrics.com) --- Free Tool Try the CLTV Calculator → Interactive calculator — no signup required.

How to Calculate Churn Rate (Step-by-Step for SaaS Founders)

Your churn rate tells you how fast you’re losing customers. Here’s the formula, the steps, and a worked example you can apply to your own numbers in under a minute.

Churn rate is the percentage of customers (or revenue) lost during a specific period — typically one month.

Monthly Churn Rate = (Customers Lost in Month / Customers at Start of Month) × 100

That’s the entire churn calculation. The rest of this article is about doing it correctly — because the denominator trips up more founders than the numerator.

How to Calculate Monthly Customer Churn (Step-by-Step)

Step 1: Pick your time window

Monthly is the standard for SaaS. Weekly is too noisy, quarterly hides problems. Stick with calendar months so every period is comparable.

Step 2: Count customers at the start of the month

This is your denominator. Count every customer with an active, paid subscription on day one of the month. Do not include free trials. Do not include customers who sign up mid-month — they belong to next month’s denominator.

Step 3: Count customers lost during the month

Your numerator. A customer counts as lost if they cancelled, didn’t renew, or had a failed payment that was never recovered by month-end. Paused subscriptions are a grey area — if the customer isn’t paying, count them as lost for that month.

Step 4: Divide and multiply by 100

That gives you your monthly customer churn rate as a percentage.

If you want a deeper look at what churn rate actually means and why it matters, read the churn rate definition first.

Worked Example

You start February with 80 paying customers. During the month, 6 cancel their subscriptions.

Churn Rate = (6 / 80) × 100 = 7.5%

7.5% monthly churn means you’re replacing nearly your entire customer base every year. That’s a product problem, not a marketing problem.

Now compare: same 80 customers, only 2 cancel. Churn = 2.5%. Annual churn drops to roughly 26%. Still real, but survivable while you iterate.

How to Calculate Revenue Churn

Customer churn counts heads. Revenue churn counts euros. They often tell different stories.

Monthly Revenue Churn Rate = (MRR Lost to Cancellations + MRR Lost to Downgrades) / MRR at Start of Month × 100

Say you start March with €12,000 MRR. You lose €600 from cancellations and €200 from downgrades. Revenue churn = (€800 / €12,000) × 100 = 6.7%.

Revenue churn matters more than customer churn when your pricing varies across plans. Losing one €199/mo customer hurts more than losing four €19/mo customers — but customer churn treats them equally. For a full breakdown, see the difference between revenue churn and customer churn.

Annual Churn from Monthly Churn

Don’t just multiply by 12. That overstates the number because it ignores compounding. Use this instead:

Annual Churn Rate = 1 − (1 − Monthly Churn Rate)^12

With 7.5% monthly churn:

Annual Churn = 1 − (1 − 0.075)^12 = 1 − 0.925^12 ≈ 1 − 0.397 = 60.3%

You’d lose roughly 60% of your customers over a year. That’s the number investors and acquirers look at — and the number that should keep you focused on retention.

What Counts as Good Churn?

Segment	Monthly Churn	Annual Churn
Consumer SaaS	3–8%	30–65%
SMB SaaS	3–5%	31–46%
Mid-market	1–2%	11–22%
Enterprise	<1%	<10%

Source: Recurly churn benchmarks (2024) and Bessemer Venture Partners cloud index. If you’re bootstrapped and selling to SMBs at €29–€99/mo, aim for under 5% monthly. Anything above that means you’re on a treadmill — growing revenue by acquiring customers faster than you lose them, which is expensive and unsustainable.

For a complete diagnosis of what drives churn and how to fix it, read the full churn diagnosis guide.

Common Mistakes in Churn Calculation

Including free trials in the denominator. Trials aren’t customers. If you count 200 “users” but only 80 pay, your churn rate looks artificially low.

Counting mid-month signups in the starting count. A customer who joined on February 15th shouldn’t appear in your February denominator. They start being at risk of churning in March.

Ignoring failed payments. Involuntary churn (failed credit cards, expired payments) is still churn. If Stripe can’t collect after retries, that customer is lost. Track it separately if you want — but don’t pretend it doesn’t exist.

Mixing customer churn and revenue churn. They measure different things. Report both, but never combine them into one number. Use your retention rate calculator to see both side by side.

FAQ

How do you calculate churn rate?

Divide the number of customers lost during a period by the number of customers at the start of that period, then multiply by 100. For example, losing 6 customers out of 80 gives you a 7.5% monthly churn rate. Use customers at the start of the period as the denominator — never include mid-period signups.

What is a good churn rate for SaaS?

For SMB SaaS products, 3–5% monthly churn is typical, and under 3% is strong. Enterprise products with annual contracts often see below 1% monthly. Your target depends on your average contract value and billing cycle, but if you’re above 5% monthly, you have a retention problem that growth alone won’t solve.

What is the difference between customer churn and revenue churn?

Customer churn counts the percentage of accounts lost, treating every customer equally regardless of what they pay. Revenue churn measures the percentage of MRR lost, weighting high-value customers more heavily. A product with low customer churn but high revenue churn is losing its best customers — which is worse than the headline number suggests.

How do you convert monthly churn to annual churn?

Use the compounding formula: Annual Churn = 1 minus (1 minus Monthly Churn Rate) raised to the power of 12. Do not multiply monthly churn by 12 — that overstates the annual figure. A 5% monthly churn rate compounds to roughly 46% annual churn, not 60%.

Stop calculating churn in spreadsheets. NoNoiseMetrics computes customer and revenue churn from your Stripe data automatically — free up to €10k MRR →

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