Churn rate and retention rate measure the same underlying phenomenon — how many subscribers you keep versus lose over a period — but they're expressed inversely. Understanding both is important because different stakeholders use different conventions.
Definitions
Churn rate = (customers lost in period / customers at start of period) × 100 Retention rate = 100% − churn rate
If you start a month with 500 customers and end with 485, you lost 15: - Churn rate = 15 / 500 × 100 = 3% - Retention rate = 100% − 3% = 97%
Why both numbers matter
Churn rate is used operationally — teams track "we reduced churn from 4% to 3%" because it's easier to think about the problem. Retention rate is used for investor communications and cohort analysis because it shows the positive trajectory.
A retention rate of 97% per month compunds to an annual retention rate of 0.97^12 = 69.4%. This is why monthly retention rates feel deceptively high — losing "only" 3% per month means you've lost 30% of your starting cohort by month 12.
Revenue churn vs customer churn
There are two types of churn:
- Customer (logo) churn — the percentage of customers who cancel, regardless of their size
- Revenue churn — the percentage of MRR lost to cancellations
A single enterprise customer canceling can represent 30% revenue churn with 0.1% logo churn. This is why investors focus on Net Revenue Retention (NRR) — which includes upsells and expansion revenue — rather than customer churn alone.
NRR > 100% means your existing customer base grows in aggregate even as individual accounts churn. The best SaaS companies (Snowflake, Twilio, Datadog) consistently run 120–170% NRR.
Calculate your churn revenue impact
Use the Subscription Churn Revenue Loss Calculator to see the exact monthly and annual revenue impact of your current churn rate, plus the minimum new MRR acquisition needed to maintain your growth target.