What is a Churn Rate?
A metric that measures how many customers you retain and at what value. To calculate churn rate, take the number of customers you lost during a certain time frame, and divide that by the total number of customers you had at the very beginning of that time frame.
Example
For example, suppose a software company has 1,000 customers at the beginning of the month, and by the end of the month, 50 customers have canceled their subscriptions. In this case, the churn rate for the month would be calculated as:
Churn Rate = (Number of Customers Lost / Total Number of Customers at the Beginning of the Period) * 100
Churn Rate = (50 / 1000) * 100
Churn Rate = 5%
So, the churn rate for the month is 5%. This means that 5% of the company’s customer base churned or canceled their subscriptions during that period.