How this calculator works
Churn rate divides the customers lost during a period by the customers present at its start. Use one period type consistently: monthly churn with monthly figures, annual churn with annual figures. The reciprocal of the churn rate estimates the average number of periods a customer stays, assuming a constant rate. In the simple model a customer is either active or gone, so customers who pause and return are counted by their net effect on the starting count.
Formula
Churn rate = customers lost / customers at the start × 100. Retention rate = 100% - churn rate. Average customer lifetime = 1 / churn rate in periods.
Worked example
Starting with 1,000 customers and losing 50 gives 5% churn and 95% retention. The implied average customer lifetime is 1 / 0.05 = 20 periods, so 20 months if the period was a month.
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Frequently asked questions
What counts as a lost customer?
A customer who cancels, does not renew or has no active subscription at the end of the period. Be consistent about the grace period for failed payments and about customers who downgrade rather than leave. Some businesses measure revenue churn instead, which weights the customers by what they pay.
Why is lifetime missing?
Lifetime is shown only when churn is above zero. With zero churn no customer leaves, so the reciprocal is infinite and not meaningful.
Does customer lifetime include profit?
No. It is a time measure, not a value measure. Multiply it by the average gross profit per customer per period to get a simple customer lifetime value, keeping in mind that a constant churn rate is an approximation.