What this calculator is doing (in plain English)

Think of your business as a bucket. New customers pour in from the top. Churn is a hole in the bucket. Expansion is like customers increasing their usage over time (a smaller bucket inside the bucket that grows). Growth depends on which force wins month after month.

This tool projects two things in parallel: (1) customer count and (2) monthly recurring revenue (MRR). You can run it for 1–36 months and instantly see the end state. The key idea is compounding: small differences in churn or expansion make big differences after many cycles.

Each month you start with a customer base. A percentage churns, and then you add new customers:

• Churned customers = Previous customers × churn rate
• Retained customers = Previous customers × (1 − churn rate)
• End customers = Retained customers + New customers

If you want to stay flat (no growth), your new customers must cover churn: New needed to stay flat ≈ Previous customers × churn rate. That’s why churn directly creates marketing pressure — it determines how many new customers you must acquire just to avoid shrinking.

Revenue has one extra moving part: expansion. After churn, the remaining customers can expand usage (or downgrade). To keep the model simple and useful, we apply expansion to the retained revenue base:

• Start MRR = Previous customers × ARPA
• Retained MRR = Start MRR × (1 − churn rate)
• Expanded MRR = Retained MRR × (1 + expansion rate)
• New MRR = New customers × ARPA
• End MRR = Expanded MRR + New MRR

This is not cohort-perfect (real businesses have different ARPA for new vs existing customers), but it’s excellent for “directional truth”: churn fights compounding, expansion helps compounding, acquisition must beat the net effect.

NRR answers: “If I added zero new customers this month, would revenue from existing customers go up or down?” In our simplified model, monthly NRR is:

• NRR (monthly) ≈ (1 − churn + expansion)

If your churn is 3% and expansion is 1%, your NRR is about 98% (you’re shrinking). If churn is 2% and expansion is 3%, your NRR is about 101% (you can grow even without new customers). The difference looks tiny on paper — but compounding makes it huge over time.

Growth teams often talk about improving churn by “half a point” (e.g., from 3.0% to 2.5%). This calculator runs two projections: baseline and improved churn. The “lift” is the difference between the two end states (customers and MRR).

Why this is viral/useful: you can screenshot the result and show your team, “Here’s what a 0.5% churn improvement is worth.” It turns a fuzzy retention goal into a concrete number.

Realistic scenarios (and what they imply)

Below are example interpretations you can recreate by setting the sliders. The point is not the exact number — it’s the shape of the outcome.

Start customers = 1,000. New/month = 120. Churn = 3%/mo. Expansion = 1%/mo. ARPA = $50. Months = 12. You may feel like 120 new customers per month is strong — yet a 3% churn means you lose about 30 customers in month 1, then more as your base grows. Revenue also leaks each month unless expansion is strong enough.

• Interpretation: You’re running a treadmill. Acquisition is doing the heavy lifting.
• Action: Even a small churn reduction can “unlock” growth without increasing ad spend.

Start customers = 2,000. New/month = 100. Churn = 5%/mo. Expansion = 0%/mo. ARPA = $30. Months = 12. Here, churn is a large hole: 5% of 2,000 is 100 customers — so your new adds just keep you flat. You’re spending to replace what you lose, not to grow.

• Interpretation: Fixing churn is equivalent to “creating” new customers every month.
• Action: Identify churn drivers (onboarding gaps, value perception, pricing mismatch, support pain).

Start customers = 800. New/month = 60. Churn = 2%/mo. Expansion = 3%/mo. ARPA = $80. Months = 12. With expansion greater than churn, existing revenue grows by itself. That means acquisition becomes an amplifier instead of a lifeline.

• Interpretation: Growth is more durable and less dependent on ads.
• Action: Invest in success motions that drive expansion (activation, usage milestones, add-ons).

Use any scenario above and set churn improvement to 0.5%. The lift you see is the compounding value of retention work. If your team debates whether a retention initiative is worth it, this makes the tradeoff visible: “This reduces churn by 0.5% and yields +X customers and +$Y MRR after 12 months.”

Note: this tool uses monthly rates. If you track churn annually, convert first (or use your monthly churn directly).

A simple workflow for planning (5 minutes)

1. Start with reality: enter your current base, new adds, churn, expansion, and ARPA. Run 12 months first (it’s long enough to feel compounding).
2. Check NRR: if the NRR meter is below 100%, you’re shrinking without acquisition. Ask: “How much acquisition is required to outrun this leak?”
3. Do one “retention bet”: set churn improvement to a plausible target (0.2–1.0%). Screenshot the lift. That’s a clean way to communicate value to leadership.
4. Stress test: lower new customers by 20–30%. If growth collapses, you’re acquisition-dependent. That’s a risk (ads get more expensive, channels saturate, competitors copy you).
5. Turn it into a plan: pick a single lever for the next 30 days: onboarding, activation, pricing/packaging, customer success, or win-back.

• High churn early (first month): onboarding, activation, time-to-value.
• Churn later (month 3+): ongoing value, features, support, price alignment.
• Low expansion: packaging, add-ons, usage milestones, upsell prompts.
• Low new adds: channel mix, positioning, conversion rate, sales cycle.

The goal isn’t to “optimize everything.” It’s to identify the biggest limiter. In many subscription businesses, that limiter is churn.

Frequently Asked Questions

• Is this customer churn or revenue churn?

  The “churn rate” slider is treated as a monthly loss rate applied to both customers and existing revenue, which makes it a helpful approximation. In reality, customer churn and revenue churn can differ if higher-paying customers churn less (or more). Use this tool as a quick model, then refine with cohort/segment data.

• What does expansion mean here?

  Expansion is the monthly growth rate of revenue from retained customers (upsells, seat growth, add-ons). If you don’t have expansion, set it to 0%. If you have downgrades, you can approximate them by increasing churn or reducing expansion.

• How do I convert annual churn to monthly churn?

  A simple approximation is annual churn ÷ 12. A more accurate conversion treats it as compounding: monthly churn ≈ 1 − (1 − annual churn)^(1/12). If you already track monthly churn, use that directly.

• Why does a small churn change create a big lift?

  Because the base you retain this month becomes the base you can retain and expand next month. Retention compounds. So does the cost of losing customers. That’s why 0.5% can look “small” but become huge across 12–36 months.

• What’s a “good” churn rate?

  It depends on market, pricing, and contract length. Consumer subscriptions usually have higher churn. B2B with annual contracts often has lower churn. What matters most is direction (improving) and unit economics (LTV vs CAC).

• Does this include reactivations or win-backs?

  Not explicitly. If you run win-back campaigns, you can treat win-backs as part of “new customers per month” (or add them as a separate line in your internal spreadsheet).

Use churn math responsibly

Churn is not “bad customers.” It’s usually a signal of mismatch: expectations, onboarding, pricing, value, or product experience. Use the output to guide investigation, not to blame.

• Pick your top churn cohort (by plan, channel, or time-to-churn).
• Write down the top 3 reasons customers leave (survey/support notes).
• Ship one retention experiment in 2 weeks.