Churn Rate

Churn rate, also known as attrition rate, measures the percentage of customers a company loses within a specified time frame. At SaaS software companies, it signifies the number of subscribers who either cancel or opt not to renew their subscriptions. A higher churn rate means that more customers are ending their relationship with the company, whereas a lower churn rate indicates better customer retention.The churn rate is computed using the formula: (Lost Customers ÷ Total Customers at Start) x 100. For instance, if a business begins the quarter with 100 customers and loses 10 by the end, the churn rate would be calculated as (10 ÷ 100) x 100, resulting in a 10% quarterly churn rate.