Churn Rate Calculator

The formula this calculator uses

Churn Rate = Customers Lost / Customers at the Start

Lost

Customers who cancelled or failed to renew during the period

Start

Customers at the beginning of the period, the denominator

c

Monthly churn as a decimal — 0.04 for 4%

1 / c

Average customer lifetime in months, 25.0 when c is 0.04

How to check the result by hand

1. 1

   Fix the period and declare the denominator

   Choose the window — a month is the usual unit — and decide whether the denominator is the start-of-period count or the average count. Here we use the start: 1200 customers at the beginning of the month. Writing that choice down is what makes the rate comparable with the next month's figure and with anyone else's.

2. 2

   Count the customers lost inside that window

   A loss is a cancellation or a non-renewal that lands within the period. In the worked case 48 customers leave during the month. Keep voluntary and involuntary losses separate if you can, because they respond to completely different interventions and blending them hides which one is moving.

3. 3

   Divide lost by the starting count

   48 / 1200 = 0.04, so the monthly churn rate is 4% and 1200 - 48 = 1152 customers are retained. Use the start figure as the divisor, not the end figure: dividing 48 by 1152 would give 0.041666666666666664, which answers a different question and inflates the rate.

4. 4

   Compound the rate to whatever span you need to report

   The retention factor is 1 - 0.04 = 0.96, and across twelve months that compounds to 0.96^12 = 0.6127097573297671. Annual churn is therefore 1 - 0.6127097573297671 = 0.38729024267023293. Never multiply the monthly rate by twelve; the base shrinks each month and the product overstates the loss.

5. 5

   Convert to average lifetime and pair it with the absolute loss

   Average lifetime is 1 / 0.04 = 25.0 months, which is the number lifetime-value models need. Quote the 48 lost customers beside the 4% as well, because a percentage with no scale attached tells the reader nothing about how many replacements the business must find next month.