What is the churn rate?

The churn rate measures the share of customers or subscribers who leave within a defined period — cancelling a subscription, going inactive, or closing an account. Formula: churn rate (%) = customers lost ÷ customers at start of period × 100. It is the central metric of any subscription or recurring-revenue model.

What is a good churn rate?

It depends heavily on business model and segment. As rough orientation for monthly logo churn in B2B SaaS: enterprise under 1 %, mid-market around 1–2 %, SMB and prosumer around 3–7 %. Repeat-purchase ecommerce and annual-contract models need their own yardsticks. The trend in your own rate usually says more than any external comparison.

How does churn affect customer lifetime value?

Lifetime value depends on how many purchases a customer makes, which depends on how long they stay. High churn cuts the relationship short, so it reduces lifetime value directly. Running it the other way: taking churn from 5 % to 3 % can lift lifetime value by 25–50 % without changing margin or order value at all.

What is the difference between voluntary and involuntary churn?

Voluntary churn is a decision: the customer cancels, usually over dissatisfaction, low usage or a competitor. Involuntary churn is a payment failure — an expired card, an insufficient balance — where nobody intended to leave. Involuntary churn often responds substantially to better dunning: automated retries, card-update prompts and sensible timing, none of which require touching the product.

Customer Churn Rate Calculator

What share of your customers leaves each period — and what that same rate compounds to over a year if nothing changes.

Customers at start of period Active customers or subscriptions at the beginning Customers lost Cancellations and lapses within the period

Churn rate

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share of customers lost

Customers remaining

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end of period, before any new acquisition

Time horizon (months) (optional)

How far ahead to project the same churn rate.

Customer base over time

Remaining End

Remaining after 12 months

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Customers lost over the horizon

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The curve shows why churn compounds: each month loses the same percentage of whatever is left, not the same number of customers. Real churn varies month to month, so read the shape rather than the exact endpoint.

Next step

Customer Lifetime Value Calculator

Less churn means more purchases per customer — work out what that is worth.

Cancelled, lapsed, or simply gone quiet: what is churn rate counting?

The churn rate is the share of customers or subscribers who leave within a period — by cancelling, by letting a renewal lapse, or by going inactive without ever saying so. It is the load-bearing number of any recurring-revenue model: subscriptions, memberships, retainers, repeat-purchase ecommerce. A high rate means you are buying customers just to stand still, which is the most expensive way to not grow. And it feeds straight into the customer lifetime value: the longer customers stay, the more they buy, and the more each one was worth acquiring.

Churn rate formula: the denominator is where it goes wrong

Churn rate (%) = customers lost ÷ customers at start of period × 100

Two numbers, one month: how to calculate churn rate

1,000 customers at the start of the period, 50 lost during it:

Customers at start of period1,000

Customers lost50

Churn rate = 50 ÷ 1,000 × 100 = 5.0 %

Now compound it. Annual churn is not twelve times the monthly figure — it is 1 − (1 − monthly)¹², because each month takes its cut of a smaller base. At 5 % monthly you keep 54 % of the cohort after a year and lose 46 % of it, with no new acquisition at all. At 2 % monthly the annual figure is 21.5 %, not 24 %.

What counts as a good SaaS churn rate depends on who you sell to

Monthly logo churn — the share of customer accounts, not of revenue:

Enterprise SaaS < 1 %

Mid-market SaaS approx. 1 – 2 %

SMB / prosumer SaaS approx. 3 – 7 %

Read these as orientation, not targets: they describe monthly logo churn in B2B SaaS and subscription businesses. Other models — repeat-purchase ecommerce, annual contracts — need their own yardsticks entirely. And in practice the trend in your own rate tells you more than any comparison with someone else's.

The same number from the other side: your customer retention rate

Retention is simply what is left: a 5 % churn rate is a 95 % retention rate, and every lever below moves both at once. Which of the two you report is a matter of framing; which you improve is not.
Fix onboarding first: early churn — inside the first 30 to 90 days — is almost always a failure to reach value, not a failure of the product. Getting customers to their first real result quickly is the single most effective lever against it.
Separate voluntary from involuntary churn: failed payments are churn nobody chose. Expired cards and declined charges respond to dunning — automated retries, card-update prompts, sensible timing — without touching the product at all.
Read churn next to acquisition: strong acquisition hides weak retention, because the base still grows. What matters is net growth and whether lifetime value carries the acquisition cost over the long run.

Background and sources

Churn benchmarks are monthly and vary widely by segment (enterprise versus SMB) and pricing model. The figures above are rough orientation, not targets.

Recurly Research — «Churn Rate Benchmarks» (2,200 merchants, 76 million subscribers)

Frequently asked questions

What is the churn rate?: The churn rate measures the share of customers or subscribers who leave within a defined period — cancelling a subscription, going inactive, or closing an account. Formula: churn rate (%) = customers lost ÷ customers at start of period × 100. It is the central metric of any subscription or recurring-revenue model.
What is a good churn rate?: It depends heavily on business model and segment. As rough orientation for monthly logo churn in B2B SaaS: enterprise under 1 %, mid-market around 1–2 %, SMB and prosumer around 3–7 %. Repeat-purchase ecommerce and annual-contract models need their own yardsticks. The trend in your own rate usually says more than any external comparison.
How does churn affect customer lifetime value?: Lifetime value depends on how many purchases a customer makes, which depends on how long they stay. High churn cuts the relationship short, so it reduces lifetime value directly. Running it the other way: taking churn from 5 % to 3 % can lift lifetime value by 25–50 % without changing margin or order value at all.
What is the difference between voluntary and involuntary churn?: Voluntary churn is a decision: the customer cancels, usually over dissatisfaction, low usage or a competitor. Involuntary churn is a payment failure — an expired card, an insufficient balance — where nobody intended to leave. Involuntary churn often responds substantially to better dunning: automated retries, card-update prompts and sensible timing, none of which require touching the product.