Marketing
Annual churn from a monthly rate
Compound the retention factor across the months in the year, then subtract from one. With c = 0.04 and m = 12 this gives 0.38729024267023293, not 0.48.
The Formula
Annual = 1 - (1 - c)^m
Compound the retention factor across the months in the year, then subtract from one. With c = 0.04 and m = 12 this gives 0.38729024267023293, not 0.48.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| c | Monthly churn rate as a decimal | decimal | The output of the monthly formula. 0.04 here. |
| m | Number of compounding months | months | 12 for a year, 3 for a quarter. 0.96^12 = 0.6127097573297671 is the retained share. |
| A | Churn over the whole span | decimal | 0.38729024267023293 for 4% a month across twelve months. Always below m times c. |
What Each Symbol Means
cdecimal
Monthly churn rate as a decimal
The output of the monthly formula. 0.04 here.
mmonths
Number of compounding months
12 for a year, 3 for a quarter. 0.96^12 = 0.6127097573297671 is the retained share.
Adecimal
Churn over the whole span
0.38729024267023293 for 4% a month across twelve months. Always below m times c.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate churn rate page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate Churn Rate, filed under Business. Every number the guide produces comes from substituting into this one line.