What is Churn Rate?
Churn rate definition: churn rate refers to the percentage of people who subscribe and leave a subscription service during a specific time period.
Churn rate time periods are most often measured in the following increments:
The churn rate percentage is then calculated by taking the number of customers lost in the last time period and dividing it by the number of customers gained.
An equation that looks like this:
[Lost] / [Gained] x 100 = [Churn Rate %]
Let’s look at a hypothetical example.
Wanderlust TV is a subscription video on demand company.
Last quarter they:
- Gained 1000 customers
- Lost 250 customers
- 250 / 1000 x 100 = 25%
Wanderlust has a churn rate of 25%.
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Additional resources about Churn Rate
- SaaS Metrics: Rethinking Customer Churn Rate & LTV/CAC
- How To Calculate Customer Churn Rate (+ The Best Saas Churn Formula)