PDB Academy

Academy › Glossary › Fundamentals

Churn rate

The share of customers or revenue lost over a period.

FundamentalsIntermediate

Definition

Churn measures cancellations. In subscription businesses it is tracked monthly or annually. Even small monthly churn compounds into large yearly losses, which is why it matters so much to growth.

Formula

Churn rate = customers lost / customers at start of period

Example

Hypothetical exampleA 3% monthly churn rate loses about 31% of customers over a year, since 0.97 to the 12th power is about 0.69.

Learn it in context with PDB Academy

Guides, short videos and a plain-English glossary in one place, with tools to try each idea on real market data. The basics are free.

Create a free accountOpen PDB Academy