[{"data":1,"prerenderedAt":512},["ShallowReactive",2],{"/blog/calculate-annual-churn-rate":3},{"id":4,"title":5,"articleSection":6,"author":7,"body":8,"category":6,"coverBuilder":495,"cta":496,"ctaBody":495,"ctaTitle":495,"dateModified":497,"datePublished":498,"description":499,"draft":500,"extension":501,"hideCover":500,"image":502,"meta":503,"navigation":504,"ogImage":495,"path":505,"readTime":506,"seo":507,"sidebarCta":495,"stem":508,"tags":509,"wordCount":510,"__hash__":511},"blog/blog/calculate-annual-churn-rate.md","How to calculate annual churn rate: five formulas, benchmarks","Articles","team-churnkey",{"type":9,"value":10,"toc":475},"minimark",[11,15,24,29,44,68,73,185,190,193,200,203,214,217,221,224,229,231,242,245,249,252,257,259,270,273,277,280,285,287,298,301,305,308,313,317,320,340,345,352,356,363,366,369,375,379,417,421,425,428,432,435,439,448,468,472],[12,13,14],"p",{},"Looking at churn on an annual timescale gives you a better pulse on your business.",[12,16,17,18,23],{},"Even a 5% monthly churn means you lose 46% of your customers annually [",[19,20,22],"a",{"href":21},"/blog/convert-monthly-churn-to-annual-churn","source","].",[25,26,28],"h2",{"id":27},"how-to-calculate-annual-churn-rate","How to calculate annual churn rate?",[12,30,31,32,36,37,43],{},"To calculate the annual churn rate, ",[33,34,35],"strong",{},"there are four different formulas and a"," ",[19,38,40],{"href":39},"/churn-metrics",[33,41,42],{},"shortcut",".",[45,46,47,58,61],"ul",{},[48,49,50,51,54,55],"li",{},"All formulas we've mentioned are valid ways to calculate annual churn rate, but ",[33,52,53],{},"they're used in slightly different contexts"," and ",[33,56,57],{},"can yield different results.",[48,59,60],{},"The choice often depends on the company's growth stage, business model, and specific analytics needs.",[48,62,63,64,67],{},"In practice, many companies ",[33,65,66],{},"at least calculate two of them"," to get a comprehensive view of their churn. One for annual customer churn (#1 or #2) and another for revenue customer churn (#3 or #4).",[12,69,70],{},[33,71,72],{},"Let's consider a hypothetical SaaS with the following scenario:",[74,75,76,91],"table",{},[77,78,79],"thead",{},[80,81,82,88],"tr",{},[83,84,85],"th",{},[33,86,87],{},"Users at Start of Year",[83,89,90],{},"1000",[92,93,94,105,115,125,135,145,155,165,175],"tbody",{},[80,95,96,102],{},[97,98,99],"td",{},[33,100,101],{},"Users at End of Year",[97,103,104],{},"1100",[80,106,107,112],{},[97,108,109],{},[33,110,111],{},"Total Users Churned During Year",[97,113,114],{},"200",[80,116,117,122],{},[97,118,119],{},[33,120,121],{},"New Users Acquired During Year",[97,123,124],{},"300",[80,126,127,132],{},[97,128,129],{},[33,130,131],{},"Revenue at Start of Year",[97,133,134],{},"$1,000,000",[80,136,137,142],{},[97,138,139],{},[33,140,141],{},"Revenue at End of Year",[97,143,144],{},"$1,150,000",[80,146,147,152],{},[97,148,149],{},[33,150,151],{},"Revenue Lost from Churned Customers",[97,153,154],{},"$180,000",[80,156,157,162],{},[97,158,159],{},[33,160,161],{},"MRR at Start of Year",[97,163,164],{},"$100,000",[80,166,167,172],{},[97,168,169],{},[33,170,171],{},"MRR at End of Year",[97,173,174],{},"$115,000",[80,176,177,182],{},[97,178,179],{},[33,180,181],{},"MRR Lost to Churn",[97,183,184],{},"$15,000",[186,187,189],"h3",{"id":188},"_1-using-average-number-of-users","1. Using average number of users",[12,191,192],{},"Annual Churn Rate = (Number of Churned Users / Average Number of Users) * 100",[194,195,197],"article-action-card",{"variant":196},"grey",[12,198,199],{},"This formula is often used when a company experiences significant growth or fluctuation in its user base throughout the year. It calculates the customer churn (#) as opposed on revenue churn ($).",[12,201,202],{},"Using the numbers from our example scenario:",[45,204,205,208,211],{},[48,206,207],{},"Number of Churned Users = 200",[48,209,210],{},"Average Number of Users = (1000+1100)/2 = 1050",[48,212,213],{},"Annual Churn Rate = (200 / 1050) * 100 = 19.05%",[12,215,216],{},"This means the company lost 19.05% of its customers over the year.",[186,218,220],{"id":219},"_2-using-number-of-users-at-start-of-year","2. Using number of users at start of year",[12,222,223],{},"Annual Churn Rate = 1 - (Number of Users at the End of the Year/Number of Users at the Start of the Year) *100",[194,225,226],{"variant":196},[12,227,228],{},"This formula is more commonly used by established companies with a stable user base, subscription-based services, businesses focusing on year-over-year comparisons. It's simpler to calculate and provides a clear comparison between the start and end of a defined period. However, it shows overall growth, masking the actual churn.",[12,230,202],{},[45,232,233,236,239],{},[48,234,235],{},"Number of Users at the End of the Year = 1100",[48,237,238],{},"Number of Users at the Start of the Year = 1000",[48,240,241],{},"Annual Churn Rate = (1 - (1100 / 1000)) * 100 = -10%",[12,243,244],{},"The negative value indicates growth rather than churn. The business was able to acquire more users than it lost and churn rate is -10% over the year.",[186,246,248],{"id":247},"_3-using-total-revenue-at-the-start-of-the-year","3. Using total revenue at the start of the year",[12,250,251],{},"Annual Revenue Churn Rate = Revenue Lost from Churned Customers/Total Revenue at the Start of the Year*100",[194,253,254],{"variant":196},[12,255,256],{},"This formula is better for businesses with varied revenue streams. You calculate revenue churn ($) as opposed to customer churn (#).",[12,258,202],{},[45,260,261,264,267],{},[48,262,263],{},"Total Revenue at Start of Year: $180,000",[48,265,266],{},"Revenue Lost from Churned Customers: $1,000,000",[48,268,269],{},"Annual Revenue Churn Rate = ($180,000 / $1,000,000) * 100 = 18%",[12,271,272],{},"The third formula reveals the exact revenue loss from churned customers.",[186,274,276],{"id":275},"_4-using-mrr-inputs","4. Using MRR inputs",[12,278,279],{},"Annual Revenue Churn Rate = (MRR Lost to Churn / MRR at the Start of the Year) * 100",[194,281,282],{"variant":196},[12,283,284],{},"This formula is more suited to subscription-based businesses with recurring revenue models. You calculate revenue churn ($) as opposed to customer churn (#).",[12,286,202],{},[45,288,289,292,295],{},[48,290,291],{},"MRR at Start of Year: $15,000",[48,293,294],{},"MRR Lost to Churn: $100,000",[48,296,297],{},"Annual Revenue Churn Rate = ($15,000 / $100,000) * 100 = 15%",[12,299,300],{},"This means the company lost 15% of its monthly recurring revenue due to churn over the year. The fourth formula shows a lower MRR churn, suggesting that churned customers may have been lower-value subscribers.",[186,302,304],{"id":303},"_5-using-monthly-churn","5. Using monthly churn",[12,306,307],{},"If you already have monthly churn with you, read how to convert monthly to annual churn.",[12,309,310],{},[19,311,312],{"href":21},"Convert Monthly To Annual Churn: Calculator, Formula, Benchmarks",[25,314,316],{"id":315},"visualize-all-your-churn-metrics-in-1-click-for-free","Visualize all your churn metrics in 1-click for free",[12,318,319],{},"Get a free, visual analysis of your churn metrics and understand how your retention compares to other companies.",[45,321,322,325,328,331,334,337],{},[48,323,324],{},"Gross and new churn rates by date.",[48,326,327],{},"Involuntary and voluntary churn rates.",[48,329,330],{},"Revenue vs logo churn.",[48,332,333],{},"Retention cohort analysis.",[48,335,336],{},"New vs. old churn.",[48,338,339],{},"Churn cake charts.",[12,341,342],{},[19,343,344],{"href":39},"Discover Free Churn Metrics",[12,346,347],{},[19,348],{"href":349,"rel":350},"https://app.churnkey.co/register?q=audit&ref=churnkey.co",[351],"nofollow",[25,353,355],{"id":354},"reduce-high-annual-churn-with-churnkey","Reduce high annual churn with Churnkey",[12,357,358],{},[359,360],"img",{"alt":361,"src":362},"","/images/blog/calculate-annual-churn-rate/image-37.webp",[12,364,365],{},"Churnkey offers support for both voluntary and involuntary churn prevention as well as deep analytics so you can understand the root causes of your customer churn.",[12,367,368],{},"On average, our customers retain 20-40% of the revenue that they would have otherwise lost to churn.",[12,370,371],{},[19,372,374],{"href":373},"/","Explore Churnkey",[25,376,378],{"id":377},"additional-reading","Additional reading",[45,380,381,387,393,399,405,411],{},[48,382,383],{},[19,384,386],{"href":385},"/blog/renewal-rate","How to improve renewal rate?",[48,388,389],{},[19,390,392],{"href":391},"/blog/hard-soft-declines","Hard and soft declines",[48,394,395],{},[19,396,398],{"href":397},"/blog/customer-exit-survey","Customer exit survey",[48,400,401],{},[19,402,404],{"href":403},"/blog/customer-retention-rate-calculator","Retention rate and revenue rate calculator",[48,406,407],{},[19,408,410],{"href":409},"/blog/gross-churn-vs-net-churn","Gross churn vs net churn",[48,412,413],{},[19,414,416],{"href":415},"/blog/retention-curves","Customer retention curves",[25,418,420],{"id":419},"faqs","FAQs",[186,422,424],{"id":423},"annual-churn-rate-formula","Annual churn rate formula",[12,426,427],{},"The annual churn rate formula can be calculated in four ways. One way is 1 - (Number of Users at the End of the Year/Number of Users at the Start of the Year) *100",[186,429,431],{"id":430},"how-to-calculate-annualized-churn-rate","How to calculate annualized churn rate?",[12,433,434],{},"To calculate annualized churn rate, you need to calculate customer churn and revenue churn. Annual Customer Churn = (Number of Churned Users / Average Number of Users) * 100. Annual Revenue Churn Rate = Revenue Lost from Churned Customers/Total Revenue at the Start of the Year * 100.",[186,436,438],{"id":437},"what-is-a-good-annual-churn-rate","What is a good annual churn rate?",[12,440,441,442,447],{},"These metrics were originally sourced by ",[19,443,446],{"href":444,"rel":445},"https://www.lennysnewsletter.com/p/monthly-churn-benchmarks?ref=churnkey.co",[351],"Lenny's monthly churn post",". We've converted them to annual rates.",[45,449,450,456,462],{},[48,451,452,455],{},[33,453,454],{},"For B2C SaaS:"," Between 31% and 46% annual churn is GOOD, and less than 22% is GREAT. These include subscription products sold to consumers; e.g. Duolingo, Spotify, Grammarly.",[48,457,458,461],{},[33,459,460],{},"For B2B SMB + Mid-Market:"," Between 26% and 46% is GOOD, and less than 17% is GREAT. These include products sold to companies with less than 1,000 employees and charge less than $1K per month for the average customer. Examples: Gusto, Intercom, Airtable, Asana",[48,463,464,467],{},[33,465,466],{},"For B2B Enterprise:"," Between 11% and 22% is GOOD, and less than 6% is GREAT. These products are sold to companies with more than 1,000 employees, generally charging more than $5K per month for the average customer; e.g. Salesforce, Snowflake, Workday, ADP",[186,469,471],{"id":470},"what-is-5-annual-churn","What is 5% annual churn?",[12,473,474],{},"A 5% annual churn rate means that 5% of your total user base (or customers) at the start of the year churns (or cancels) by the end of the year. If you start with 1,000 users, a 5% annual churn means you would lose 50 users over the year. This is a very healthy rate.",{"title":361,"searchDepth":476,"depth":476,"links":477},3,[478,486,487,488,489],{"id":27,"depth":479,"text":28,"children":480},2,[481,482,483,484,485],{"id":188,"depth":476,"text":189},{"id":219,"depth":476,"text":220},{"id":247,"depth":476,"text":248},{"id":275,"depth":476,"text":276},{"id":303,"depth":476,"text":304},{"id":315,"depth":479,"text":316},{"id":354,"depth":479,"text":355},{"id":377,"depth":479,"text":378},{"id":419,"depth":479,"text":420,"children":490},[491,492,493,494],{"id":423,"depth":476,"text":424},{"id":430,"depth":476,"text":431},{"id":437,"depth":476,"text":438},{"id":470,"depth":476,"text":471},null,"newsletter","2025-01-29","2024-08-18","To calculate the annual churn rate, there are five different formulas. They're used in slightly different contexts and can yield different results.",false,"md","/images/blog/calculate-annual-churn-rate/annual-churn.webp",{},true,"/blog/calculate-annual-churn-rate","5 min read",{"title":5,"description":499},"blog/calculate-annual-churn-rate",[6],1107,"MKzGe6Q7c0kcN2aZERS-8Hoe8bN0Z5iUINQROTx85N0",1787075319535]