SaaS Churn
What is churn
Churn is the amount of users that are leaving/unsubscribing from your app. While gross revenue may be fairly constant with higher churn, it can have disastrous effects on the overall profit margins of an app. Getting churn under control is an easy way to increase profits and LTV without spending additional money on marketing and customer acquisition.
How do I calculate churn?
- Number of total users
- Number of users unsubscribing
- Customer Acquisition Cost (CAC)
- Life Time Value (LTV)
Why is churn so bad?
- When a customer churns you lose both new potential revenue and have to pay to acquire a new customer
- Customer LTV goes down
- It happens fast! Lets say you have 1000 customers, and are able to get 100 new customers a month (+10%) but you also churn around 10% of customers a month. This is basically break even and flat revenue, but when you think about it, on average you are replacing your entire customer base every 10 months.
Simulating Churn
For the purposes of this, I built a simple Churn Calculator so you can simulate various scenarios.