Churn Cost Calculator

The true cost of churn goes beyond lost subscription revenue. It includes the cost to acquire replacement customers (CAC), lost expansion revenue from churned accounts, increased support costs from dissatisfied customers before they leave, and the compounding effect of a shrinking customer base over time.

Churn compounds because each month you lose a percentage of a shrinking base. If you start with 1,000 customers at 5% monthly churn and add no new customers, after one year you have roughly 540 customers left. After three years, you have about 157. The revenue lost accelerates because you are also losing the future revenue those customers would have generated.

Customer replacement cost is the CAC (Customer Acquisition Cost) needed to acquire a new customer to replace each one that churns. If your CAC is $600 and you lose 25 customers per month, you need to spend $15,000 per month just to stay at the same customer count, before any growth spending.

Multiply the number of customers at the start of the period by your churn rate to get monthly churned customers. Then multiply by ARPA (Average Revenue Per Account) to get monthly revenue lost, and multiply by 12 for the annualized figure. For example: 500 customers x 5% churn x $150 ARPA = $3,750/month = $45,000/year.

Targets vary by segment. Enterprise SaaS companies (annual contracts, higher ACV) typically target under 1% monthly churn. SMB SaaS products with monthly billing commonly see 3-7% monthly churn. Any reduction in churn compounds positively, so focus on steady improvement rather than an absolute target.

Retained customers cost nothing to re-acquire, are more likely to expand their usage over time, and serve as references for new customers. Studies consistently show that a 1% improvement in retention has a larger impact on long-term revenue than a 1% improvement in acquisition. The cost to retain is typically much lower than the cost to replace.