How to Calculate a Customer Churn Rate in Excel

Calculate monthly churn for a subscription business, a weighted churn rate over six months, and what that churn means over a full year.

You will learn to

• Calculate monthly churn from cancellations and starting customers
• Calculate an average churn rate over several months
• Annualize a monthly churn rate

How it works

Customer churn rate is the share of customers who cancel during a period: cancellations ÷ customers at the start of the period. Use the starting count, not the ending count, so new sign-ups during the month don’t make churn look smaller than it is.

To summarize several months, divide total cancellations by total starting customers rather than averaging the monthly percentages. Small monthly churn compounds: a 4.2% monthly rate means only (1 − 4.2%)^12 ≈ 60% of customers remain after a year, so annual churn is about 40% — not 12 × 4.2%.

=D7/B7