Churn and lifetime calculator
Average customer lifetime is one divided by your monthly churn rate. Annual retention is (1 − monthly churn) to the power of twelve, which is why a churn rate that sounds small is usually not.
Churn and lifetime, step by step
The compounding is the part people get wrong. 5% monthly churn does not mean 60% of customers leave in a year — it means 54% of them do, because each month’s 5% applies to a smaller base. It also means an average customer stays 20 months, which caps what you can afford to pay to acquire one.
The arithmetic cuts both ways and sharply. Cutting churn from 5% to 3% a month takes average lifetime from 20 months to 33 — a 65% increase in what every customer is worth, bought without acquiring anybody new. For most subscription businesses, that is the highest-leverage number on the page.
Where this number misleads you
The 1 ÷ churn formula assumes a constant churn rate, and real churn is front-loaded: most cancellations happen in the first three months, and customers who survive a year rarely leave. A single blended rate therefore understates the lifetime of your established cohorts and overstates the new ones. Measure churn by cohort age if the decision matters.
Questions people ask
How do I convert monthly churn to annual churn?
Annual retention is (1 − monthly churn)¹², and annual churn is one minus that. 5% monthly churn gives 54% annual churn, not 60%, because each month’s loss applies to a base already reduced by the previous months.
How do I calculate average customer lifetime?
Divide 1 by the monthly churn rate expressed as a decimal. 5% monthly churn (0.05) gives a 20-month average lifetime. Multiply that by gross margin per customer per month to get lifetime value, which is the figure that bounds what you can spend on acquisition.
What is a good monthly churn rate?
For SMB subscription products, 3–5% monthly is common and under 3% is good. Enterprise contracts are measured annually, where under 10% a year is the usual bar. Consumer subscriptions churn far faster. Compare like with like: a blended rate across segments hides both the good and the bad.