How to Calculate Churn Rate: Formula, Excel and Annualizing

Customer churn rate formula

Churn rate % = Customers lost in the period ÷ Customers at the start of the period × 100

• Customers at start: Paying customers on the first day of the period.
• Customers lost: Customers from the starting base who cancelled or lapsed during the period. Customers who joined and left within the same period are usually excluded or tracked separately.

How to calculate customer churn rate in Excel and Google Sheets

Excel, using the cells in the worked example below:

=D4/B4

Worked example

A meal-kit subscription company tracks monthly customer churn and wants September's rate plus an annualized figure for its board deck.

1. September churn = 52 ÷ 1,336 = 3.89%.
2. July and August: 41 ÷ 1,240 = 3.31% and 47 ÷ 1,295 = 3.63%. Churn has risen two months in a row.
3. Annualized from September: 1 − (1 − 0.0389)^12 = 37.9% in Excel as =1-(1-D4/B4)^12. Multiplying 3.89% × 12 = 46.7% would overstate it.
4. Check the base: each month's start equals last month's start + new − lost (1,240 + 96 − 41 = 1,295).

Result: 3.89% monthly churn in September (about 37.9% annualized)

How to interpret customer churn rate

Churn is the leak that caps growth: at 3.9% monthly churn a business must replace about 38% of its customers every year just to stand still. Consumer subscriptions often see monthly churn in the mid-to-high single digits, while B2B software sold on annual contracts typically reports much lower monthly figures; compare with businesses that sell to the same kind of customer on the same contract length. Look at churn by cohort and by plan too, since new customers usually churn faster than those who have stayed a year.

Common mistakes

• Annualizing by multiplying by 12. Churn compounds on a shrinking base; use 1 − (1 − monthly)^12.
• Including customers acquired mid-month in the denominator, which lowers the rate. Use the starting base, or the average of start and end if you state it.
• Mixing logo churn (customers) with revenue churn (MRR lost). A few large cancellations can make them diverge sharply.
• Counting paused or downgraded accounts inconsistently. Decide whether a pause is churn and stick to it.

Calculate customer churn rate with Better Analyst

Connect your data or upload a spreadsheet, then ask in plain English. Better Analyst writes and runs the calculation and shows the steps, so you can check the number.

• “Calculate monthly logo churn and MRR churn for the last 12 months from our subscriptions table.”
• “Show churn by signup cohort and by plan.”
• “Alert me if monthly churn goes above 4%.”

Usually calculated from: PostgreSQL, Supabase, Google BigQuery, Snowflake, MySQL, Google Sheets.

Try Better Analyst free

Further reading

• Connect Supabase
• Customer lifetime value formula
• How to calculate ARR
• Alerts