Churn Rate Calculator


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What is the churn rate?

The churn rate is a metric of lost customers each month. The churn ratio applies to subscription business models (like SaaS). 

The churn rate is usually expressed as a percentage value rather than a ratio and reflects the average number of users who stopped using your product.

Who can benefit from this Churn Rate Calculator?

Our monthly churn rate calculator is designed especially for SaaS business owners who wish to optimize their business. 

Keeping a low churn rate is crucial for that kind of business to succeed. Below we describe how to calculate the churn rate and what you could do to lower its value. 

A low churn rate translates to the fast growth of monthly recurring revenue and allows the business to flourish. 

How do you calculate the churn rate?

The churn rate is a simple ratio of customers who resign from your service in a given time to the total number of customers. 

Churn rate formula

Churn = lost_users / total_users * 100%

Where:

  • Lost_users - the number of users who canceled the subscription in a given period

  • Total_users - the number of users at the beginning of the analyzed period 

Note that the total_users include the lost_users, so you should put the value here from the analyzed period's beginning. It is crucial to get an accurate result. 

What is a reasonable churn rate?

The churn could be reasonable if it does not exceed the rate of acquiring new customers. If this rule is kept, your business is growing. Otherwise, it shrinks.

  • Churn rate > Acquisition rate - the business is shiring.

  • Churn rate < Acquisition rate - the business is growing.

How can I reduce the churn rate?

If you wish to reduce the churn rate of your service and increase your profits, follow the procedure below:

  1. Try to understand your customers - what their needs are.

  2. Monitor customer satisfaction. 

  3. Identify the bottlenecks and fix them. 

  4. Be in good contact with your users. Keen a dialog with the most engaged users. 

  5. Try to regain lost users by giving them incentives to return.

  6. Monitor your competitors. Maybe they run marketing campaigns that directly target your customers. 

Similar tools

If you are serious about growing your SaaS business, you may find many useful tools here on Calcopolis. For starters, the revenue growth calculator allows you to forecast your future revenue once you improve your churn rate. 

The break-even point calculator will let you know how many customers you need to acquire to start making profits. If you have a profitable business, you may be interested in your margin of safety.

There are even more useful calculator in the business category.


Authors

Created by Lucas Krysiak on 2022-07-20 17:00:10 | Last review by Mike Kozminsky on 2022-07-21 18:28:55

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