Revenue Churn Calculator Formula
Understand the math behind the revenue churn calculator. Each variable explained with a worked example.
Formulas Used
Gross Revenue Churn Rate
gross_revenue_churn = starting_mrr > 0 ? ((churned_mrr + contraction_mrr) / starting_mrr) * 100 : 0Total MRR Lost
total_lost = churned_mrr + contraction_mrrAnnualized Revenue Loss
annualized_loss = (churned_mrr + contraction_mrr) * 12Variables
| Variable | Description | Default |
|---|---|---|
churned_mrr | Churned MRR (lost from cancellations)(USD) | 12000 |
contraction_mrr | Contraction MRR (lost from downgrades)(USD) | 3000 |
starting_mrr | Starting MRR(USD) | 300000 |
How It Works
How to Calculate Revenue Churn
Formula
Gross Revenue Churn = (Churned MRR + Contraction MRR) / Starting MRR x 100
Revenue churn captures all recurring revenue losses in dollar terms, combining full cancellations with downgrades. It weights each lost customer by their spending, so losing one $5,000/month enterprise account matters more than losing five $50/month accounts. This is the metric investors scrutinize most.
Worked Example
A company starts with $300,000 MRR, loses $12,000 from cancellations and $3,000 from downgrades.
churned_mrr = 12000contraction_mrr = 3000starting_mrr = 300000
- 01Total MRR Lost = $12,000 + $3,000 = $15,000
- 02Gross Revenue Churn = ($15,000 / $300,000) x 100 = 5%
- 03Annualized Loss = $15,000 x 12 = $180,000
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