About this tool
Cost of churn, explained
Put a dollar figure on customer churn. Enter your paying customers, monthly churn rate and revenue per customer to see the revenue lost over the next 12 months, the customers who leave, and what reaching a lower churn rate would keep.
How to use it
- 1Set your Paying customers, or pick a preset: Early-stage, SMB SaaS or Mid-market.
- 2Set your Monthly churn: the share of customers who cancel in a typical month.
- 3Set the Revenue per customer, per month, and under Goal, the Monthly churn you could reach.
- 4Read the Revenue lost over 12 months, the customers lost, the yearly churn and the revenue kept at your goal, with the 12 month chart.
How it works
How the cost of churn is calculated
Churn compounds. Each month the same rate applies to the customers who are still there, so after k months your base is customers × (1 − monthly churn)^k. The calculator follows your current customers only, with no new ones added, over the next 12 months.
Each month, every customer who has left by then is a month of revenue you do not collect. Adding those missed months gives the revenue lost over 12 months: a customer who leaves in month 3 costs ten months, one who leaves in month 11 costs two.
Yearly churn is 1 minus (1 minus monthly churn) to the power of 12, so 3% a month is 30.6% a year, not 36%. Average customer lifetime is 1 divided by the monthly churn, in months. The goal line runs the same calculation at the churn rate you could reach, and the difference is the revenue kept.
With the starting figures, 1,200 customers at 3% monthly churn and $120 a month, 367 customers leave within a year and $302,530 of revenue is lost over 12 months. Reaching 2% keeps $93,569 of it. Expansion revenue and downgrades are not modeled, and the figure covers this year only: a lost customer keeps costing revenue after month 12.
Customers left after k months = Customers × (1 − churn)^k. Revenue lost over 12 months = sum over months 1 to 12 of (Customers − Customers left) × Revenue per customer
When to use it
Ways people use it
Sizing a retention project
Compare the revenue lost to churn with the cost of a customer success hire or a retention tool, and see what share of the loss it needs to recover.
Showing the effect of a small improvement
Set the goal half a point below your current churn. The revenue kept line and the dashed curve on the chart show what that improvement is worth this year.
Board and investor updates
Turn a churn percentage into a revenue figure everyone reads the same way. Copy results gives the inputs, figures and summary as text, and Copy link reopens the same numbers.
FAQ
Questions people ask
How do you calculate the cost of churn?
Follow your current customers month by month, apply the churn rate to those who remain, and add up the monthly revenue each departed customer no longer pays. That compounding approach is what this calculator uses.
How do I convert monthly churn to annual churn?
Annual churn is 1 minus (1 minus monthly churn) to the power of 12. At 3% a month that is about 30.6% of a group gone after a year, less than the 36% you get from 3% times 12, because each month applies to fewer customers.
What is the difference between customer churn and revenue churn?
Customer churn counts the accounts that leave. Revenue churn counts the recurring revenue lost, including downgrades. If your largest customers churn less than small ones, revenue churn can be lower than customer churn.
Why does a small change in churn matter so much?
Churn repeats every month and every lost customer takes their future payments with them, so a fraction of a point adds up over a year.