The formula
Churn rate = customers lost in the period / customers at the start x 100
To turn a monthly rate into a yearly one: yearly churn = 1 - (1 - monthly churn)^12
Stripe and Gainsight both use this count. New customers stay out, because they weren't there at the start.
As of November 2026.
How to calculate churn rate
Count the customers you had on the first day of the period, and how many of them had left by the last day. Divide the second number by the first.
Worked example, with made-up figures: Bright Kettle Coffee starts the month with 400 office customers on a monthly plan. By the end of the month, 12 have cancelled. Its reps also won 20 new customers, and they don't count. Churn is 12 / 400 = 3%, so 97% stayed.
Each customer pays S$50 a month, so the 12 take S$600 a month with them, or S$7,200 over a year. Next month's new sales have to replace that before any of them count as growth.
Logo churn and revenue churn
Logo churn counts customers. Revenue churn counts what they paid. Recurly gives revenue churn as revenue lost to churn, divided by total revenue in the period, x 100. Chargebee splits it in two: gross counts what left, and net takes off what existing customers added.
Gross revenue churn = (revenue lost + cuts) / starting revenue x 100
Net revenue churn = (revenue lost + cuts - upsells) / starting revenue x 100
Worked example, with the same made-up firm: 400 customers bring in S$20,000 a month. Say the 12 who left were bigger accounts at S$150 each. That's S$1,800, or 9% revenue churn, while logo churn still reads 3%. Add S$200 of cuts and S$800 of upsells. Gross is S$2,000 / S$20,000 = 10%. Net is S$1,200 / S$20,000 = 6%.
Why 3% a month isn't 36% a year
Monthly churn doesn't multiply by 12, because each month's losses come out of a smaller group.
Worked example: keep 97% a month, and after 12 months 0.97^12 = 0.694 of your starting customers are left, so yearly churn is about 31%. Going the other way, 20% a year is 1 - 0.8^(1/12), or about 1.8% a month. David Skok's SaaS metrics guide makes the same point: 2% a month is about 22% a year.
At 3% a month, a customer stays about 1 / 0.03 = 33 months on average. That's the number to hold against what they cost to win.
Split it by rep
Your team's rate is an average of each rep's book. A worked example, with made-up figures:
| Rep | Customers at the start | Lost | Churn |
|---|---|---|---|
| Wei Ling | 160 | 3 | 1.9% |
| Arjun | 140 | 3 | 2.1% |
| Siti | 100 | 6 | 6% |
| Team | 400 | 12 | 3% |
The team's 3% hides one book at 6%. Take that to your next 1:1 as a question, because Siti may have inherited the accounts that were already leaving.
How to measure it in your team
- Decide what counts as leaving. For a plan or contract, it's a cancellation. For customers who buy now and then, it's no order in a set time, such as 6 months. Write the rule down and keep it.
- Use the same period each time. Turn it into a monthly rate before you compare two figures.
- Keep the two kinds apart. Chargebee calls a customer who chooses to cancel voluntary churn, and a failed payment involuntary churn. They need different fixes.
- Write down why each customer left. One line each tells you, after a quarter, which reason to fix first.
What is a good churn rate?
It depends what the rate is measured over, so check that first. 5% a month is about 46% a year. 5% a year is about 0.4% a month. No outside figure settles it either, because contract length and price move it. Good is lower than your own last four quarters, worked out the same way.
| Who's looking | What they check | What good looks like |
|---|---|---|
| Sales manager | Monthly churn, by rep, and the revenue it takes | Falling, with new sales more than replacing what leaves |
| Account owner | The customers who left this month, and why | A reason written down for every one |
| Rep | Customers nobody has spoken to in 30 days | That list gets shorter each month |
How to bring churn down
When the rate rises, check these causes first:
- New customers leaving in their first months, before anyone has called them.
- Customers nobody has spoken to since the sale.
- A price rise nobody talked through before the invoice arrived.
- One reason that keeps coming up in the notes and never gets fixed.
And what brings it down:
- Have the rep call every new customer in their first month.
- Each month, list the customers nobody has spoken to in 30 days, and give each one to a rep with a date.
- Tell customers about a price change yourself, before the invoice does.
- Fix the reason at the top of the list before you chase more new customers, since each new one can leave for the same reason.
Work out your churn rate
Put in your own counts. The boxes start with the worked example's numbers.
Churn: 3%
- A year: 30.6%
- Customers kept: 97%
- Revenue lost: $600 a month
Where it shows up in your week
Palby Sales Tracker doesn't work out churn, and it can't see a customer leave. That number lives in your sales records. It counts the calls that come before a loss: rename a starting tile to "Account call", and each one is a tap. Then export the activity feed to CSV and put each rep's count beside their churn.
Keep reading
Common questions
Ask 5% of what period first. 5% a year keeps most of your customers for years. 5% a month loses about 46% of them in a year.
You lost 1 of every 5 customers you started with. If that's a yearly figure, it's about 1.8% a month, and if it's a monthly figure, it's about 93% a year.
Take the share you keep each month, raise it to the 12th power, and take that from 1. At 2% a month, 0.98^12 is about 0.78, so yearly churn is about 22%.
The same customer count, plus a revenue version on monthly recurring revenue. A team selling one-off deals needs a rule for what counts as leaving.
No. Churn only counts the customers you had at the start, and new ones go into next period's starting count.
They're two sides of one count. With 97% of your starting customers kept, churn is 3%. [Client retention rate](/sales-tracker/kpis/client-retention-rate) has that sum.
For customers, yes. Check whether a figure is monthly or yearly before you compare two of them.
Sources
- Stripe, How to calculate monthly churn and what it can tell you, read 2 November 2026
- Gainsight, Calculating customer churn, read 2 November 2026
- Recurly, How to calculate churn rate: a better formula, read 2 November 2026
- Chargebee, What is churn rate, read 2 November 2026
- David Skok, SaaS Metrics 2.0, first published 16 January 2013, updated 18 June 2026, read 2 November 2026