Chart: Customer Churn Rate

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Customer Churn Rate charts the percentage of subscribers who have canceled all of their subscriptions over time.

Customers churn voluntarily when they cancel due to no longer needing your product or service (or not seeing its value), or involuntarily due to the expiration of their credit card or a failed transaction.

TL;DR

Customer churn rate charts the loss of subscribers. For SaaS businesses, this rate is typically 3–7% per month. 

What is a good customer churn rate?

Ideally, your customer churn rate is as low as possible. Even a seemingly low monthly churn rate of, e.g., 5% corresponds to an annual loss of nearly half (46%) of existing customers.​

In our analysis of data from SaaS businesses, the lower your business’s average revenue per account (ARPA), the higher your churn rate. A SaaS business with less than $10 ARPA can expect a relatively high customer churn rate of 6–7% per month. For businesses with $500 ARPA or more, the customer churn rate is lower at 1–2% per month.

Learn more on our blog.

Chart Notes

  • Familiarize yourself with the Churn rate formula and Churn recognition settings in ChartMogul and make sure these are configured to support your needs.
  • Review how ChartMogul handles contraction and churn in the lifecycle of a subscription.
  • This chart tracks the number of customers whose status has changed to Cancelled. Customers who have multiple subscriptions and cancel one, but not all of their subscriptions, are still classified as Active and, therefore, their cancellations classified as Contraction. Learn more about customer statuses.

Calculation

ChartMogul calculates Customer Churn Rate based on your Churn rate formula setting.

Standard Formula (B2B)

Formula

Math equation: open paren the number of customers who churned in the period minus the number of customers who joined and churned in the period minus the number of customers who churned and reactivated in the period close paren divided by the number of customers at the start of the period

Example

At the start of the month, you have 100 customers. During the month, 12 customers churn. Of those who churn, one reactivates, and one had joined during the period. Your customer churn rate is 10%: (12 − 2) / 100.

Shopify Formula (B2C)

Formula

Math equation: sum of open paren the number of active customers at the start of the day minus the number of active customers at the end of the day close paren divided by the number of active customers at the start of the day

ChartMogul excludes customers you gain that day and customers who both churn and reactivate on the same day from the calculation.

Example

At the start of Monday, you have 100 active customers. That day, you lose five customers. The next day, you gain ten but lose five customers, leaving you with 100 customers at the end of Tuesday. ChartMogul excludes the new customers gained on Tuesday from the calculation and produces a customer count of 90.

The customer churn rate for this period (Monday – Tuesday) is the sum of each day’s churn: 10.26%:

  • Monday’s customer churn rate: (100 − 95) / 100 = 5%
  • Tuesday’s customer churn rate: (95 − 90) / 95 = 5.26%

Chart Data

See Chart Data.

Next steps

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