What is churn rate?
How is churn rate calculated?
Churn rate divides what you lost by what you started with. For customer churn, take the customers who cancelled during the period and divide by the customer count at the start of that period. Say you began the month with 200 customers and 10 cancelled: that is 10 ÷ 200 = 0.05, or five percent monthly churn. Revenue churn follows the same shape, but you divide lost recurring revenue by the recurring revenue you began with, so a departing large account counts for more than a small one.
Why does churn matter so much?
Because it compounds. A steady five percent monthly churn does not mean you keep ninety-five percent of customers for the year; it means you lose roughly that share every month from a shrinking base. Left unaddressed, that erosion works directly against new signups and can flatten monthly recurring revenue even while sales keep closing deals. Small differences in churn produce large differences in the size of the business a year out.
What's the difference between churn and retention?
Churn and cohort retention describe the same customers from opposite ends. Churn is the share who leave in a period, stated as one figure. Retention is the share who stay, usually followed across many months for a single group of customers who joined at the same time. Churn is the quick health check; cohort retention shows whether the losses cluster in the first month or keep accumulating over a customer's life.
Reading churn from an export
Churn is usually measured from a subscriptions export, such as a CSV from Stripe that lists each subscription's status and cancellation date. Rather than filter and count by hand, you can open the file and ask for the rate over a period in plain English. Paperswift runs the calculation in your browser, and only your column names and their types are sent when you ask, never the values in your rows. It is a lighter route than wiring the same export through a tool like Power Query, as covered in our Power Query alternative note.
Frequently asked questions
What is the difference between customer churn and revenue churn?+
Customer churn counts how many accounts left, treating every customer equally. Revenue churn measures the recurring revenue those departures took with them, so losing one large account weighs more than losing several small ones. Most teams track both, because a low customer churn can still hide a painful revenue churn if big accounts leave.
How do I calculate monthly churn rate?+
Take the number of customers lost during the month and divide it by the number of customers you had at the start of the month, then express the result as a percentage. For revenue churn, replace the customer counts with the recurring revenue at each point. Exclude new signups from the starting figure to keep it clean.
What counts as a good churn rate?+
It depends heavily on your market and customer size, so there is no single benchmark. Businesses serving large accounts often expect low single-digit monthly churn, while those serving very small customers usually see more. The useful comparison is against your own trend over time and against similar businesses, not against a universal target.
How does churn relate to retention?+
They are two views of the same movement. If monthly churn is five percent, month-one retention is ninety-five percent, since every customer either stays or leaves. Churn rate summarises the loss in a single number, while cohort retention shows how a specific group of customers holds up month after month rather than in one snapshot.
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Start free todayLast updated · by Stefan