Churn Rate

Churn Rate is a special metric that measures the percentage of customers or subscribers who have stopped using their products or services over a certain period.

It measures the number of customers who leave or cancel their subscriptions against the total number of customers at the start of that period. 1


churn rate formula

How is the Churn Rate Calculated?

To calculate the churn rate, you have to divide the number of customers lost during the period by the number of customers at the start of the period, then multiply by 100 to get a percentage.

Churn Rate = (Number of Customers Lost in Period / Total Customers at the Start of Period) x 100

  • Number of Customers Lost in Period: Customers who stopped using your service in a specific period (cancellations, dormancy, no engagement).
  • Total Customers at the Start of Period: Total number of customers you had at the start of the period you’re analyzing churn for (active subscribers, accounts).2


The primary purpose of measuring churn rate is to understand how satisfied and loyal customers are and how well the company keeps them.

A high churn rate could signal problems with the product, service, price, or overall customer experience, pointing to areas needing work.3

On the other hand, a low churn rate means customers are happy and sticking around, supporting steady income and growth over time.4

How Churn Rate Works

Churn rate works by showing businesses how many customers they’re losing over a specific period, like a month or a year.

Here’s a quick look at how it functions:

  1. Start with a Time Frame: Choose a period, such as a month, to examine.
  2. Count Your Customers: Note how many customers you had at the start of this period.
  3. Count Losses: Determine the number of customers who stopped using your service or canceled their subscriptions by the end of this period.
  4. Calculate the Rate: Divide the number of customers lost by the number of customers you started with, then multiply by 100 to get a percentage.5

This percentage tells you the rate at which customers are leaving.


Churn Rate is especially important for businesses where customers pay regularly, like with phone plans, streaming services, or gym memberships.

Here’s where it’s often used:

  • Phone and Internet Services: To see how many customers are switching to different companies.
  • Apps and Online Services: To check how many people stop paying for the app or service.
  • Monthly Boxes or Subscriptions: To determine how many subscribers don’t renew their subscriptions.
  • Banks: To understand how many people are closing their accounts.
  • Insurance: To see how many are not renewing their policies.
  • Gyms: To track how many members don’t renew their gym membership.6


Imagine your SaaS (Software as a Service) company got 1,000 new customers in May but lost 100 because they didn’t know they had to renew their subscriptions.

To find the churn rate, divide the number of customers who left (100) by the total new customers (1,000) and then multiply by 100%.

This calculation shows a churn rate of 10%.

Related Terms


1. Wikimedia Foundation. (2023, November 9). Churn rate. Wikipedia.

2. Churn rate. Wall Street Prep. (2023, December 11).

3. Davis, J. (2007). Magic Numbers for Sales Management: Key Measures to Evaluate Sales Success. Singapore: Wiley.

4. Gordini, N., & Veglio, V. (2017). Customers churn prediction and marketing retention strategies. An application of support vector machines based on the AUC parameter-selection technique in B2B e-commerce industry. Industrial Marketing Management62, 100-107.

5. How to calculate customer churn rates. Stripe. (1AD).

6. What is churn? definition, examples and advantages. airfocus. (n.d.).

Scroll to Top