Free tool
Churn Rate Calculator
Divide customers lost by customers at the start: 15 of 500 is 3.0% a month, 30.6% a year compounded.
- Customer churn, this period
- 3.0%
- Customer churn, annualized
- 30.6%
- Gross MRR churn, this period
- 4.0%
- Gross MRR churn, annualized
- 38.7%
- Net MRR churn, this period
- -1.0%
- Net MRR churn, annualized
- -12.7%
- Net revenue retention (NRR), this period
- 101.0%
- Net revenue retention (NRR), annualized
- 112.7%
- Gross revenue retention (GRR), this period
- 96.0%
- Gross revenue retention (GRR), annualized
- 61.3%
- Customers left of 100
- What $100 of MRR becomes
- Of 100 at the start
How this was worked out
- Customer churn: 15 lost out of 500 at the start is 3.0% per month.
- Annualized: 1 minus (1 minus 3.0%) to the power of 12 is 30.6%, not 36.0%.
- Gross MRR churn: $1,500 cancelled plus $500 downgraded, over $50,000 at the start, is 4.0% per month, or 38.7% a year.
- Net MRR churn: subtract $2,500 of expansion and the figure becomes -1.0% per month, negative because expansion is larger than the MRR you lost.
- NRR is 1 minus net churn: 101.0% per month, 112.7% over a year. GRR is 1 minus gross churn: 96.0% per month, 61.3% over a year.
How the churn figures are worked out
Churn measures what you lose from the customers and revenue you started a period with. The calculator reports five measures: customer churn, gross MRR churn, net MRR churn, net revenue retention (NRR) and gross revenue retention (GRR). Each is shown for the period you entered and annualized, so a month, a quarter and a year can be compared on one footing.
The base is whoever was already paying when the period opened. Someone who signed up midway and left before it closed is not in that base, so counting them would overstate churn.
The formulas in words
- Take the customers who left during the period and divide by the headcount you began the period with.
- Gross MRR churn is cancelled MRR plus downgraded MRR, divided by MRR at the start. Expansion is left out.
- Net MRR churn is cancelled plus downgraded minus expansion, divided by MRR at the start. It drops below zero when upgrades outweigh the losses.
- NRR is 1 minus net MRR churn. GRR is 1 minus gross MRR churn.
- Annualizing compounds the rate over 12 months. It never multiplies by 12.
The formulas in symbols
customer churn = lost / start
gross MRR churn = (cancelled + downgraded) / start MRR
net MRR churn = (cancelled + downgraded - expansion) / start MRR
NRR = 1 - net MRR churn GRR = 1 - gross MRR churn
monthly equivalent of a period rate p over m months: 1 - (1 - p)^(1/m)
annual churn = 1 - (1 - monthly)^12 annual NRR = NRR_monthly^12Worked examples
The table runs the calculator on three inputs: the monthly defaults, a quarter and a year. A quarterly or yearly figure is converted to its monthly equivalent before it is annualized, which is why the annual numbers for the quarter and the year are not simply the period figure times four or times one.
| Result | Monthly (defaults) | Quarterly example | Yearly example |
|---|---|---|---|
| Customers at the start, lost | 500, 15 | 800, 40 | 300, 60 |
| Customer churn, this period | 3.0% | 5.0% | 20.0% |
| Customer churn, annualized | 30.6% | 18.5% | 20.0% |
| Gross MRR churn, this period | 4.0% | 5.0% | 20.0% |
| Gross MRR churn, annualized | 38.7% | 18.5% | 20.0% |
| Net MRR churn, this period | -1.0% | 3.8% | 13.3% |
| Net MRR churn, annualized | -12.7% | 14.2% | 13.3% |
| NRR, this period | 101.0% | 96.3% | 86.7% |
| NRR, annualized | 112.7% | 85.8% | 86.7% |
| GRR, this period | 96.0% | 95.0% | 80.0% |
| GRR, annualized | 61.3% | 81.5% | 80.0% |
At the defaults, 15 of 500 subscribers is 3.0% a month. Compounded over a year that is 30.6%, not 36%. The difference matters: each month you lose a share of a base that is already smaller.
Monthly churn against what is left after a year
This table starts with 100 subscribers and applies a steady monthly churn for 12 months. The last column shows the wrong shortcut of multiplying the monthly rate by 12, which overstates annual churn more and more as churn rises.
| Monthly churn | Customers left of 100 after 12 months | Annual churn (compounded) | Wrong: monthly times 12 |
|---|---|---|---|
| 1% | 88.6% | 11.4% | 12% |
| 2% | 78.5% | 21.5% | 24% |
| 3% | 69.4% | 30.6% | 36% |
| 5% | 54.0% | 46.0% | 60% |
| 10% | 28.2% | 71.8% | 120% |
Edge cases
- Customers lost greater than customers at the start is invalid. Entering 600 lost from 500 returns an explanation and no figures (status: invalid).
- Customers at the start equal to zero is the empty state (status: empty).
- Negative net churn is allowed and explained. With expansion of $9,000 against $2,000 of losses at the defaults, net MRR churn is -14.0% and NRR is 114.0%.
- Leaving the MRR fields blank gives customer churn only, with 2 result rows and a step that says the revenue figures are not shown.
- A period churn of 100% annualizes to 100%. Losing all 500 subscribers returns 100.0%.
- Cancellations plus downgrades larger than the starting MRR is invalid, because you cannot lose more MRR than you started with.
Questions people ask
How do I calculate churn rate?
Take the number who left and divide it by the number you began with. 15 lost out of 500 is 3.0%.
Why not multiply monthly churn by 12 for annual churn?
Because each month's losses come from a base that is already smaller. 3.0% a month compounds to 30.6% a year, while times 12 would give 36.0%.
How do gross and net MRR churn differ?
Gross MRR churn counts only the revenue lost to cancellations and downgrades, 4.0% at the defaults. Net MRR churn subtracts expansion, so it reads -1.0%, which means existing customers grew revenue by more than they shrank it.
Can churn be negative?
Net MRR churn can be, when expansion is larger than cancellations plus downgrades. At the defaults NRR is 101.0% for the month, which is above 100%.
What are NRR and GRR?
Net revenue retention is the share of starting MRR you hold after expansion, 112.7% annualized at the defaults. Gross revenue retention ignores expansion and cannot exceed 100%, 61.3% annualized here.
How does a quarterly or yearly period get annualized?
The period rate is converted to its monthly equivalent, then compounded for 12 months. The quarterly example above turns 5.0% per quarter into 18.5% a year.
Do customers who joined during the period count?
No. Only customers present at the start of the period go in the denominator, and only losses from that group go in the numerator. Counting new customers in either place distorts the rate.
Related tools
Feed your monthly churn into the customer lifetime value calculator to see an average lifetime and LTV. The MRR calculator shows how churned and expansion MRR move your ending MRR, and the trial conversion rate calculator covers the step before a customer exists. Definitions are in the SaaS metrics glossary.