What Is Churn Rate? The Definitive Guide
What is churn rate and why does every subscription business track it so closely? It measures the percentage of customers or revenue lost over a set period, falling into two types: customer churn, which tracks cancellations, and revenue churn, which tracks lost recurring revenue — and each tells a different story about business health.
By the end of this guide you'll know the two formulas, what counts as a healthy number for your industry, and how to track the trend inside a spreadsheet.
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| Customer ID |
| Plan Type |
| Status |
| Cancel Date |
| MRR |
| Reason Lost |
| Cohort Month |
| Days Active |
What usually goes wrong with it
Two metrics get confused
Counting customers who leave and tracking revenue lost are very different numbers. A single enterprise departure can spike revenue loss while the customer count barely moves.
DataMimi Separate customer and revenue views — track both in your spreadsheet side by side. The gap between them reveals whether loss is concentrated in high-value accounts or spread evenly.
No clear benchmark to aim for
Whether 3% is good or terrible depends entirely on your market, price point, and contract length. Without context the raw figure is meaningless.
DataMimi Compare against your segment — SaaS businesses under $10M ARR typically see 5–7% annually. B2B enterprise contracts run far lower. Match your benchmark to your actual market.
Lagging data hides problems
Monthly calculations only surface issues after the fact. By the time the number rises, you've already lost weeks of potential intervention.
DataMimi Track cohort trends week over week — cohort analysis in a spreadsheet shows whether retention is improving or declining before the monthly number catches up.
Common questions
What is churn rate and why does it matter?
It is the percentage of customers or revenue a business loses over a set period. It matters because even small improvements in retention compound dramatically over time.
What is the formula for this metric?
Divide customers (or revenue) lost in a period by the total at the start of that period, then multiply by 100. Losing 10 customers from 200 gives you 5%.
What counts as a healthy annual figure for SaaS?
Most SaaS companies target under 5% annually. Early-stage startups often run higher while they refine product-market fit. Enterprise contracts typically run under 2%.
How does Datamimi help track retention?
Datamimi reads your customer file, calculates the figure automatically, and flags cohorts showing abnormal patterns — no formulas to maintain.
How much does Datamimi cost?
Free plan: $0/month, 40 credits, no credit card required. Lite: $9/month, 400 credits. Starter: $24/month, 1,500 credits, up to 3 simultaneous files. Pro: $59/month, 5,000 credits with rollover. Team: $199/month, 20,000 credits, 5 users.
Try it with your own file
DataMimi reads the file you actually have — merged cells, headers below row one, totals pasted at the bottom — and shows which rows and columns every number came from.
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