How to calculate churn rate
Divide the subscribers lost during the month by the subscribers you had at the start of it, and multiply by 100. A service that begins the month with 10,000 subscribers and loses 500 has a monthly churn rate of 5%.
Count only subscribers who were present at the start. Mixing in people who joined and left within the same month distorts the figure; track those separately as trial or first-month churn.
Voluntary and involuntary churn
They need different fixes. Voluntary churn responds to content, pricing and engagement. Involuntary churn responds to payment retries, reminder emails and a grace period.
- Voluntary churn: the subscriber chose to cancel, because of price, a lack of new content or having finished what they came for
- Involuntary churn: a renewal payment failed and was never recovered, usually an expired card or insufficient funds
Why churn matters so much
Churn sets how long a subscriber stays, and therefore what one is worth. Average lifetime in months is roughly 1 divided by monthly churn: 20 months at 5%, only 10 months at 10%. Halving churn doubles lifetime value without acquiring a single new customer.
Ways to reduce churn
- Release new content on a steady schedule rather than all at once
- Offer annual plans at a discount
- Let subscribers pause or move to a cheaper tier instead of cancelling
- Recover failed payments with retries and reminders
- Ask why at cancellation and act on the commonest answers
Last reviewed