Calculating your churn: formulas and method
Calculating your churn comes down to dividing what you lost over a period by what you had at the start, then expressing the result as a percentage. The formula varies depending on whether you measure customers or revenue, and on the period chosen. The most common mistakes come from the scope and the calculation window.
In short
- Churn = loss over the period divided by the starting base, as a percentage.
- The same formula applies to customers (logo) and revenue (revenue).
- The choice of period and scope changes the result more than the formula itself.
The base formula
The churn rate is calculated by relating the number of customers lost over a period to the number of customers present at the start of that period, multiplied by one hundred. The same logic applies to revenue: recurring revenue lost relative to starting recurring revenue.
It is the simplest formula, and the one you stray from least. The difficulties do not appear in the calculation, but in the choices made around it.
Choosing the right period
A monthly churn and an annual churn do not compare directly. Too short a period amplifies noise; too long a period smooths over degradations that should have been seen early.
The right reflex is to set a period consistent with your billing cycle and stick to it, so you compare comparable rates over time.
Defining the scope
Do you count new customers acquired during the period? Do you include downgrades in revenue churn? Do you treat paused accounts separately? These scope choices influence the result more than the formula does.
The principle: an explicit, stable and documented scope. A rate is only worth something if everyone knows exactly what it measures.
Common mistakes
Mixing periods, changing scope from one quarter to the next, or confusing gross churn with net churn are the mistakes that most often distort the reading. A rate that drops because the method changed is not an improvement.
Unstable period
Comparing a monthly rate to an annual rate, or changing the window midway.
Shifting scope
Including or excluding certain accounts depending on the quarter, which makes the series incomparable.
Gross confused with net
Deducting expansion without saying so, which masks the real loss.
How Phano helps you
Calculating your churn measures the past; bringing it down requires acting on accounts before the deadline. Phano identifies upstream the accounts that will weigh in the next calculation, with their probable cause and the action to take. The Customer Success Manager steps in on the account, the Account Manager prioritizes by exposed revenue. To quickly estimate what churn is costing you, the churn calculator gives an order of magnitude in a few minutes.
Go further
Your data stays yours
Security, isolation and compliance by default. Not an add-on.
Per-organization isolation
Every organization is partitioned by Row Level Security at the database level, with a double membership check server-side.
AES-256 encryption
All data is encrypted at rest across the entire database, and in transit.
Anonymization before AI
Emails and phone numbers are masked before any model call. The original data never leaves our European servers.
GDPR compliance
Export and deletion of your data on demand. Transfers outside the EU governed by Standard Contractual Clauses.
Frequently asked questions
How do you calculate the churn rate simply?
Divide the number of customers lost over a period by the number of customers at the start of the period, then multiply by one hundred. For revenue churn, replace customers with recurring revenue.
Should you include new customers in the calculation?
Generally, churn is calculated on the starting base, without the customers acquired during the period. The key is to set a clear rule and stick to it so you compare comparable rates.
How do you estimate the cost of churn?
By relating the lost revenue to total revenue and projecting it over the year. Phano's churn calculator gives a quick order of magnitude from your figures.
See churn coming, act in time.
Connect your tools. The first diagnosis arrives the same day, in your tools.