Churn Rate

What is churn rate?

Churn rate measures the percentage of customers or subscribers who stop doing business with you within a given period. It captures the speed at which you are losing part of your customer base, whether through cancellations, non-renewals, or account inactivity that leads to termination.

Why churn rate matters

• Business stability: A high churn rate erodes recurring revenue and forces you to spend more on acquisition to keep growth steady.
  
  
• Retention signal: Monitoring churn trends helps pinpoint where customer experience or value delivery may be breaking down.
  
  
• Forecast accuracy: Churn directly affects long-term revenue projections and operational planning.
  

How to calculate churn rate

Churn Rate = (Customers lost during period / Total customers at start of period) x 100

Example: If you begin the month with 2,000 customers and lose 50 by the end, your monthly churn rate is 2.5%.

Inclusions and exclusions

• Include: All paying customers or subscribers who fully cancel or close accounts during the measured period.
• Exclude: Prospects who never converted, one-time buyers (if measuring subscription churn), and internal test accounts.
  

Churn rate in subscription businesses

In subscription models, churn rate is a direct measure of how effectively you retain recurring revenue. Losing subscribers means losing predictable income, making churn one of the most critical KPIs for publishers, SaaS platforms, and membership services. Because acquisition costs are often high, even small increases in churn can significantly impact profitability over time.

For subscription businesses, churn reflects missed opportunities for engagement, upselling, or habit formation. Tracking churn rate alongside metrics like retention lift, lifetime value (LTV), and reactivation rates allows operators to see whether their retention strategies are improving subscriber stickiness and extending account lifecycles. Subsets supports this by connecting churn patterns to specific behaviors, enabling automated campaigns before cancellations occur.