How to calculate churn rate
Churn rate is the percentage of customers or revenue you lose in a period. It is the single biggest driver of long-term growth in a subscription business, because retention compounds. Measure both logo churn and revenue churn, since they can tell very different stories.
Short answer
Calculate churn rate by dividing the customers (or revenue) lost during a period by the total at the start of the period, then multiplying by 100. For example, losing 15 of 300 customers is 5 percent customer churn. Track both customer churn and revenue churn, because losing a few large accounts can dwarf a low customer count.
Step by step
Choose customer or revenue churn
Customer (logo) churn counts accounts lost; revenue churn counts recurring dollars lost. Track both, because losing one big account can spike revenue churn while logo churn stays low.
Fix the period and the base
Pick a consistent window (monthly, quarterly, annual) and the starting count or revenue as the denominator.
- Customer churn = (customers lost / starting customers) x 100
- Revenue churn = (recurring revenue lost / starting recurring revenue) x 100
- Keep the window consistent across periods
Decide gross versus net
Gross revenue churn counts only losses; net revenue churn subtracts expansion from existing customers and can go negative, which is excellent.
Segment the churn
Break churn down by cohort, plan, and segment to find where and why customers leave.
Trend and act
Watch the trajectory and tie spikes to causes: onboarding gaps, product issues, or a bad-fit segment.
How Ardovo helps
Ardovo computes logo and revenue churn, gross and net, from live subscription data and segments it by cohort automatically. Rook flags at-risk accounts before they churn so you can act while it is still preventable.
Frequently asked questions
What is the difference between customer churn and revenue churn?
Customer (logo) churn counts the number of accounts lost. Revenue churn counts the recurring dollars lost. They diverge when your losses are concentrated in a few large or small accounts, so tracking both prevents a misleading picture.
What is negative churn?
Negative net revenue churn means expansion from existing customers exceeds the revenue lost to churn and downgrades, so your existing base grows even without new sales. It is a hallmark of best-in-class subscription businesses.
What is a good churn rate?
It varies by market and segment; enterprise SaaS often targets low single-digit annual logo churn, while SMB churn runs higher. Compare to your own cohorts over time and focus on the trend and root causes rather than a single benchmark.