Churn Rate
The percentage of customers who cancel over a given period.
Churn rate measures how many customers a business loses over a set period. It is reported monthly or annually and is usually expressed as a percentage of the starting customer base. A 5% monthly churn rate means 5 out of every 100 customers cancel each month. Lower is almost always better; top-quartile SaaS companies run under 2% monthly.
Formula
Churn rate = (Customers lost in period / Customers at start of period) x 100
Example
A SaaS starts the month with 1,000 customers and loses 30. Churn rate = (30 / 1000) x 100 = 3% monthly.
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