1. What is Churn Rate?

Churn Rate is a business metric that calculates the percentage of customers who stop using your product or service during a given time period. It's a key indicator of customer retention and business health.

2. How Does the Calculator Work?

The calculator uses the Churn Rate formula:

Where:

• Lost Customers — Number of customers who left during the period
• Average Customers — (Starting customers + Ending customers) / 2

Explanation: The formula shows what percentage of your average customer base you're losing over a specific time period.

3. Importance of Churn Rate

Details: Churn Rate helps businesses understand customer retention, predict revenue changes, and evaluate the effectiveness of customer retention strategies. Lower churn rates typically indicate better customer satisfaction and product-market fit.

4. Using the Calculator

Tips: Enter the number of customers lost during the period and the average number of customers during that same period. Both values must be positive numbers (average customers must be greater than zero).

5. Frequently Asked Questions (FAQ)

Q1: What's a good churn rate?
A: It varies by industry, but generally 5-7% annual churn is acceptable for SaaS businesses, while 3% or less is excellent.

Q2: How often should I calculate churn rate?
A: Most businesses calculate it monthly, but quarterly or annual calculations may be more appropriate depending on your business model.

Q3: What's the difference between customer churn and revenue churn?
A: Customer churn counts lost customers, while revenue churn measures lost revenue (which accounts for different customer values).

Q4: Can churn rate be negative?
A: No, churn rate is always between 0-100%. If you gain more customers than you lose, your net growth is positive but churn rate is still based on customers lost.

Q5: How can I reduce my churn rate?
A: Improve customer onboarding, provide excellent support, regularly engage customers, and continuously improve your product based on feedback.