Churn rate (sometimes written as one word, "churnrate") is the headline number on every subscription dashboard. It compresses a complex retention picture into a single percentage that most teams understand intuitively — and that is both its strength and its biggest weakness.
The formula
Customers (or revenue) lost during the period, divided by customers (or revenue) at the start of the period. Important: exclude customers acquired during the period from both numerator and denominator. Otherwise the rate trends down whenever acquisition picks up, even if retention got worse.
- Customer churn rate = customers lost ÷ starting customers.
- Revenue churn rate = MRR lost ÷ starting MRR.
- Period is usually monthly for operating dashboards, quarterly for board reviews, annual for category benchmarking.
How to read your churn rate
A single month's churn rate tells you almost nothing — it bounces around. A 6-month rolling average tells you whether the trend is moving. A cohort-based view tells you which signup vintages drive the average. Most operators look only at the headline and miss the underlying pattern entirely.
What is a reasonable churn rate?
- Replenishment subscriptions (vitamins, coffee, pet food): 5–8% monthly.
- Curation boxes: 8–15% monthly.
- B2B SaaS: 1–3% monthly.
- Consumer SaaS: 3–6% monthly.
Compare to your direct category and your own historical trend — those are the two reference points that matter.
For full benchmarks see average churn rate; for the calculation walkthrough, see how to calculate churn.