01 · Tool

What does churn cost?

Calculate how much revenue disappears when customers leave – and how much a change in churn may be worth. The formulas are open, and the assumptions are listed below. Amounts are in Norwegian kroner (NOK), but the calculation works for any currency.

Your numbers

The fields are filled in with a hypothetical example. Replace the numbers with your own. Nothing is sent or stored.

Number of customers at start

The customers you have today.

Average monthly revenue per customer

Total monthly revenue divided by the number of customers.

Monthly customer churn

Share of customers who leave during a month.

Monthly revenue from the customers who leave

Are the customers who leave smaller or larger than average? Use the same number as above if you don't know.

Gross margin

Share of revenue left after direct costs.

Analysis period

Between 1 and 60 months.

Acquisition (optional)

Cost of acquiring a new customer (CAC)

Sales and marketing costs in a period divided by the number of new customers. Optional – leave blank if you don't know.

Scenario

Alternative monthly customer churn

A scenario to compare with, for example after an initiative.

Result

NOK 1,853,754

Revenue that does not come in over 12 months because customers leave – compared with everyone staying.

Equivalent to NOK 1,297,628 in lost gross profit. Excluding new sales and expansion in the period.

Customers at start: 1,000
Customers left after 12 months: 785
Customers lost: 215
Monthly revenue at start: NOK 1,500,000
Monthly revenue after 12 months: NOK 1,177,075
Reduction in monthly revenue: NOK 322,925

Customer churn and revenue churn

Customer churn per month: 2%
Revenue churn per monthEqual to customer churn because the customers who leave are assumed to be average-sized.: 2%
Customer churn converted to 12 months: 21.5%
Revenue churn converted to 12 months: 21.5%

LTV and CAC

Expected customer lifetime1 ÷ monthly customer churn: 50 months
LTV (gross profit per customer)Monthly revenue × gross margin ÷ monthly customer churn: NOK 52,500
CAC: NOK 10,500
LTV:CACLTV ÷ CAC: 5 : 1
CAC payback periodCAC ÷ (monthly revenue × gross margin): 10 months

ScenarioHypothetical

With monthly customer churn of 1.5% instead of 2%, the company would have 49 more customers and NOK 440,557 more revenue after 12 months. LTV would be NOK 70,000 instead of NOK 52,500, and LTV:CAC 6.7 : 1.

Customers over time

Churn 2%Churn 1.5%

Show the numbers

Month	Churn 2%	Churn 1.5%
0	1,000	1,000
1	980	985
2	960	970
3	941	956
4	922	941
5	904	927
6	886	913
7	868	900
8	851	886
9	834	873
10	817	860
11	801	847
12	785	834

The customers you have at the start, excluding new sales. The axis starts at 0.

The scenario shows the arithmetic effect of a change in churn. It says nothing about what it costs to achieve the change, or whether it is realistic.

Month by month

Month	Customers	Monthly revenue
Start	1,000	NOK 1,500,000
1	980	NOK 1,470,000
2	960	NOK 1,440,600
3	941	NOK 1,411,788
4	922	NOK 1,383,552
5	904	NOK 1,355,881
6	886	NOK 1,328,764
7	868	NOK 1,302,188
8	851	NOK 1,276,145
9	834	NOK 1,250,622
10	817	NOK 1,225,609
11	801	NOK 1,201,097
12	785	NOK 1,177,075

How it is calculated

The calculator follows the customers you have at the start through the analysis period. It assumes a fixed monthly churn rate and ignores new sales and expansion. Lost revenue is the difference between the revenue you would have had if all customers stayed and the revenue you actually get when some leave.

Customer churn and revenue churn

Customer churn is the share of customers who leave. Revenue churn is the share of revenue that disappears. If the customers who leave are smaller than average, revenue churn is lower than customer churn – and vice versa. Read more in How do you measure the value of Customer Success?

Limitations

Churn is rarely constant. It is often highest in the first months and lower among long-standing customers. See How to measure churn in a fast-growing company.
The calculator does not include new sales, expansion, downgrades, price changes or seasonal variation.
The figures are nominal and not discounted.
LTV is a rough estimate that assumes constant churn and constant revenue per customer.
CAC depends on which costs you include. Use the same definition every time if you compare over time.
The scenario shows the arithmetic effect of lower churn, not what it costs or whether it is realistic.

Use the result as a starting point for analysis and discussion, not as a financial forecast.

Formulas

Customers left after T months: N × (1 − c)ᵀ
Monthly revenue churn (r): c × (revenue from customers who leave ÷ average revenue per customer)
Monthly revenue after T months: MRR₀ × (1 − r)ᵀ
Revenue in the period with churn: MRR₀ × (1 − (1 − r)ᵀ) ÷ r
Lost revenue: MRR₀ × T − revenue in the period with churn
Churn converted to 12 months: 1 − (1 − c)¹²
LTV: average revenue per customer × gross margin ÷ c
LTV:CAC: LTV ÷ CAC
CAC payback period: CAC ÷ (average revenue per customer × gross margin)

N = customers at start · c = monthly customer churn · MRR₀ = monthly revenue at start · T = number of months · CAC = cost of acquiring a new customer

What does churn cost?

Your numbers

Acquisition (optional)

Scenario

Result

Customer churn and revenue churn

LTV and CAC

ScenarioHypothetical

How it is calculated

Customer churn and revenue churn

Limitations

Go beyond the number. The calculator gives a starting point. The articles explain what lies behind it.

How to measure churn in a fast-growing company

How do you measure the value of Customer Success?

Glossary