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In 2004, Netflix was sued by its shareholders over its reported churn rates. The shareholders argued that Netflix “[used] an improper calculation of the rate that produced an artificially low churn rate.” A judge threw out the case, ruling that there is no single industry-wide definition of churn rate.
Clearly, churn rate is a critical metric for any subscription business. But there are also a variety of opinions about how to calculate it.
In this guide we'll explore:
What is Customer Churn
What does churn mean for a subscription business?
How to Calculate Churn
What are the common formulas used to calculate churn.
How to Avoid Mistakes
Avoid common pitfalls in your churn calculation with these easy tips.
Recurly has been a key advantage for us and an important contributor to our recent success.
Bartosz Olchowka, Head of Development
Recurly has allowed us to shift quite a few resources away from payments...
Joseph Wecker, Sr. Engineer