Note: Start with Churn Rate (Simple) to learn the basics of calculating churn rates.
In this section, we’ll focus on churn rates by recurring revenue.
In the Churn Rate (Simple) section, we calculated the churn rate based on the lost revenue of customers who did not renew. But businesses are more complex than that. A growing business may have the following types of renewals:
Using these renewal types, we typically categorize churn in the following ways:
You want to calculate your monthly churn rate in January.
|Start of January||900||$30.00||$27,000|
|End of January||880||$29.89||$26,300|
|Customer Count Churn||2.22%|
|MRR Churn Rate||2.59%|
While your monthly churn rate based on customer count for January is 2.22% (880 ÷ 900), your MRR churn rate is 2.59% ($1,350 ÷ $2,050).