Churn Rate & Retention Calculator

What is the churn rate formula?

Churn rate = customers lost ÷ customers at the start of the period × 100, and retention rate is 100 minus that. With 1,000 customers at the start and 50 lost the page shows 5.00% churn and 95.00% retention. If customers lost exceeds customers at the start, the loss is capped at the starting count, so churn cannot rise above 100%. With zero starting customers the churn rate is shown as 0.00%.

How is average customer lifetime worked out?

As 100 ÷ churn rate, expressed in the period you chose. At 5% monthly churn that is 20.0 months; at 15% quarterly churn it is 6.7 quarters. The formula assumes the same share of customers leaves every period, which is a simplification: real cohorts usually lose customers faster early on. When churn is zero the lifetime is undefined and the page shows “N/A (no churn)”.

How does annualized churn handle each period setting?

For monthly data it compounds: 1 − (1 − churn)^12. For quarterly data it is 1 − (1 − churn)^4. For annual data the entered rate is reported unchanged. That is why 5% monthly churn annualizes to 45.96%, not 60%: customers who have already left cannot leave again. The compounding assumes a constant rate across all periods.

How is “Estimated customer LTV” calculated?

Revenue per customer per period divided by the churn rate for that period. Revenue per customer per period is MRR × months in the period (1, 3 or 12) ÷ customers at the start. The default case is $50,000 ÷ 1,000 = $50 a month, divided by 0.05, which gives $1,000.00. It uses revenue, not gross margin, applies no discounting and assumes today’s average revenue per customer holds for life.

What does “MRR lost this period” mean exactly?

It is the MRR you entered multiplied by the churn rate: $50,000 × 5% = $2,500.00. It assumes the customers who left were average payers. If cancelled accounts were smaller or larger than average, or other customers upgraded or downgraded, your actual revenue churn will differ. The calculator has no fields for expansion, contraction or new customers.

Should customers who joined during the period be in the starting count?

No. Use only customers who were already active on the first day, and count as lost only those among them who left. New sign-ups in the period are not an input, and including them in the start figure would understate churn. Customers who join and leave inside the same period are not captured by this simple formula.

Is a 5% monthly churn rate good?

The calculator cannot say. It has no built-in benchmark, and what is acceptable depends on price point, contract length and market. What it can show is the arithmetic consequence: 5% a month means about 46% of the starting customers are gone after a year, which you can compare with your own targets.