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Churn rate

The share of customers or recurring revenue lost in a period, the single most important input to how long a subscription customer is worth anything.

Logo churn counts customers leaving; revenue churn weights them by what they paid. The two diverge sharply when small accounts leave and large ones stay, which is common and generally healthy.

Churn determines average customer life: at 2% monthly churn the average customer lasts about 50 months, at 4% about 25. Halving churn does more for customer-lifetime-value than any plausible price rise.

Example: Northwind Cloud loses 1.5% of customers a month, implying a 5.6 year average life. Revenue churn is 0.9% because departures skew toward the smallest accounts.

Related: net-revenue-retention, customer-lifetime-value, monthly-recurring-revenue, unit-economics, cac-payback-period

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