Cohort Churn Calculator

How It Works

1. Enter your monthly plan settings:

   • Initial MRR per cohort
   • First month churn rate (typically higher)
   • Second month churn rate (usually lower than first month)
   • Standard monthly churn rate (steady-state)
   • Number of cohorts to analyze

2. Enter your annual plan settings:

   • Initial MRR per cohort
   • Annual churn rate
   • Number of cohorts to analyze

3. Configure analysis settings:

   • Analysis period in months
   • Start date for cohort tracking

The calculator will generate:

• Retention curves for each cohort
• Blended retention rate across all cohorts
• Weighted average churn rate
• Customer count trends

Understanding the Results

Formulas

1. Monthly Plan Retention:

Month 1 Retention = 100% - First Month Churn Rate
Month 2 Retention = Month 1 Retention × (100% - Second Month Churn Rate)
Month N Retention = Month N-1 Retention × (100% - Standard Churn Rate)

2. Annual Plan Monthly Retention:

Monthly Churn Rate = 1 - (1 - Annual Churn Rate)^(1/12)
Monthly Retention = Previous Month Retention × (1 - Monthly Churn Rate)

3. Weighted Average Churn:

Weighted Churn = Σ (Cohort Churn × Cohort MRR) / Total MRR

Benchmarks

Early-stage churn rates typically follow this pattern:

• First month: 15-25%
• Second month: 10-15%
• Steady state monthly: 2-5%
• Annual plan: 10-15%

For established SaaS companies:

• Good: ≤ 5% monthly churn
• Concerning: 5-10% monthly churn
• Critical: > 10% monthly churn

Common Use Cases

1. Cohort Analysis

   • Track how retention changes across different signup periods
   • Identify if newer cohorts perform better or worse
   • Measure the impact of onboarding improvements

2. Plan Comparison

   • Compare retention between monthly and annual plans
   • Calculate the lifetime value difference
   • Optimize pricing strategy

3. Churn Pattern Detection

   • Identify critical drop-off points
   • Measure the effectiveness of retention initiatives
   • Forecast long-term customer base stability

Limitations

• Assumes consistent churn patterns within each plan type
• Does not account for seasonal variations
• Simplified model of expansion revenue
• Does not consider customer segment differences

Tips for Improvement

1. Reduce Early Churn

   • Improve onboarding experience
   • Set clear expectations
   • Provide early wins
   • Implement success metrics

2. Optimize Annual Plans

   • Offer incentives for annual commitments
   • Target high-retention segments
   • Bundle additional value
   • Provide migration paths

3. Monitor Cohort Health

   • Track leading indicators
   • Segment by customer characteristics
   • Measure feature adoption
   • Survey at-risk customers

Related Metrics

Core Metrics

• Quick Ratio Calculator - Balance growth against churn
• MRR Calculator - Track monthly recurring revenue
• NRR Calculator - Measure net revenue retention

Growth Metrics

• MRR Growth Calculator - Project revenue growth
• T2D3 Calculator - Track growth trajectory
• CAGR Calculator - Calculate compound growth

Financial Metrics

• LTV/CAC Calculator - Measure customer economics
• CAC Payback Calculator - Calculate acquisition costs
• SaaS Valuation Calculator - Estimate company value