# Churn Rate Calculator

> Calculate customer churn rate and revenue churn to understand retention health, predict revenue impact, and identify improvement opportunities.

- **URL**: https://dodopayments.com/tools/churn-rate-calculator

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## What is Churn Rate?

**Churn rate** measures the percentage of customers or revenue you lose over a given period. It is the inverse of retention and one of the most critical health indicators for subscription businesses. High churn compounds quickly -- a 5% monthly churn rate means you lose nearly half your customer base in a year.

There are two primary types of churn:

- **Customer Churn (Logo Churn)**: The percentage of customers who cancel their subscription in a given period.
- **Revenue Churn (MRR Churn)**: The percentage of recurring revenue lost from cancellations and downgrades.

Revenue churn is often more actionable because it accounts for the size of lost accounts -- losing one enterprise customer can hurt more than losing ten small ones.

## Why Tracking Churn Matters

- **Revenue forecasting**: Churn directly impacts your MRR growth. Even with strong acquisition, high churn creates a leaky bucket that limits scale.
- **Unit economics**: Customer Lifetime Value (LTV) is inversely related to churn. Lower churn means higher LTV, which supports higher Customer Acquisition Cost (CAC) spending.
- **Investor confidence**: VCs scrutinize churn carefully. Monthly churn above 3% for SMB products or above 1% for enterprise products is a red flag.
- **Product health signal**: Rising churn often indicates product-market fit issues, poor onboarding, or competitive pressure.

## How Churn Rate is Calculated

**Customer Churn Rate = (Customers Lost During Period / Customers at Start of Period) x 100**

**Revenue Churn Rate = (MRR Lost During Period / MRR at Start of Period) x 100**

**Net Revenue Churn = (Churned MRR - Expansion MRR) / Starting MRR x 100**

A negative net revenue churn means your expansion revenue exceeds your losses -- this is the holy grail of SaaS businesses and indicates strong product stickiness.

## Input Metrics

- **Customers at Start of Period**: Total active paying customers at the beginning of the measurement window.
- **Customers Lost**: Number of customers who cancelled or did not renew during the period.
- **MRR at Start of Period**: Total monthly recurring revenue at the beginning of the period.
- **MRR Lost to Cancellations**: Revenue lost from customers who fully churned.
- **MRR Lost to Downgrades**: Revenue lost from customers who moved to cheaper plans.
- **Expansion MRR**: Revenue gained from existing customers through upgrades or add-ons.

## Output Metrics

- **Customer Churn Rate**: The percentage of customers lost during the period.
- **Gross Revenue Churn Rate**: Total MRR lost as a percentage of starting MRR, before accounting for expansion.
- **Net Revenue Churn Rate**: MRR lost minus expansion revenue, as a percentage of starting MRR.
- **Customer Lifetime (Months)**: Estimated average customer lifespan calculated as 1 / monthly churn rate.
- **Annual Churn Impact**: Projected total revenue loss over 12 months at the current churn rate.