Churn Rate is the percentage of customers who cancel their subscriptions or stop doing business with a company during a specific period. It is a key metric for subscription businesses as it directly impacts growth and sustainability. A high churn rate indicates customer dissatisfaction or poor product-market fit, whereas a low churn rate suggests strong customer retention.

Churn Rate is calculated by dividing the number of customers lost during a period by the number of customers at the beginning of the period.

1. Basic Example: A company starts the month with 1,000 customers and loses 50 customers during the month. The churn rate is:

\begin{align}\text{Churn Rate}&= \frac{50}{1,000} \times 100\cr&= 5\%\end{align}

2. Quarterly Example: A company starts the quarter with 5,000 customers and loses 250 customers over three months. The churn rate is:

\begin{align}\text{Churn Rate}&= \frac{250}{5,000} \times 100\cr&= 5\%\end{align}