Understanding Churn Rate Calculation in Your Subscriptions App
Churn rate is one of the most important metrics for understanding customer retention. It tells you what percentage of your subscribers stopped their subscriptions during a specific time period. This guide explains how churn rate is calculated in your subscriptions app and how you can use it to gain better insights into your business.
✉️ What is Churn Rate? Churn Rate represents the percentage of existing subscribers who cancel their subscriptions over a specific period. A high churn rate may indicate issues with customer satisfaction, pricing, or product value.
🔢 Churn Rate Formula
To calculate churn rate, we use the following formula:
✅ Step-by-Step Explanation for Merchants
Choose a Churn Calculation Period
Example: February 1 to February 28
Determine the Analysis Window
We look at all subscriptions that were created between the first subscription date on your store (e.g., September 8) and the end of the month before the churn period (e.g., January 31).
Identify Canceled Subscriptions
Count how many of those subscriptions were canceled during the churn period (e.g., February 1 to February 28).
Identify Active Subscriptions
Count how many of those subscriptions were still active at the start of the churn period (e.g., on February 1).
Apply the Formula
Divide the number of canceled subscriptions by the number of active ones at the start of the period.
Multiply the result by 100 to get the churn rate as a percentage.
📊 Example Calculation
Subscriptions created between September 8 and January 31: 80
Of those, subscriptions still active on February 1: 70
Subscriptions canceled during February: 10
This means 14.29% of your active subscribers canceled during February.
📈 Why It Matters Tracking your churn rate helps you:
Identify potential issues in your product or service
Improve customer experience and satisfaction
Retain more subscribers and increase long-term revenue
If you notice a rising churn rate, consider reaching out to churned customers for feedback, improving onboarding, or adjusting your pricing and communication strategy.
If you have questions or need help interpreting your churn rate, feel free to reach out to our support team. We're here to help!