Churn rate is the percentage of users who stop using an app, or cancel a subscription, during a defined period.
What is Churn Rate?
Churn rate typically gets measured two ways depending on the business model: customer churn, which counts users who stop opening the app or cancel outright, and revenue churn, which counts the recurring revenue lost even if the customer count barely moves because larger accounts churned. Teams commonly separate voluntary churn, where a user actively cancels or stops engaging, from involuntary churn caused by a failed payment or an expired card, since the fixes for each are completely different: one is a retention rate problem and the other is a billing problem. A frequent caveat is that churn compounds: an 8% monthly rate does not mean 8% of users are lost per year, it means roughly 63% are lost, which is why teams track churn monthly even when they report it annually. Free, non-subscription apps often redefine churn as a period of inactivity rather than a cancellation event, since there is no billing event to mark the moment a user leaves.
Why Churn Rate Matters
Churn rate tells a product team how fast it is losing the users it already paid to acquire. Because retaining an existing user is almost always cheaper than acquiring a new one, a small change in monthly churn compounds into a large difference in lifetime value and revenue. Tracking churn by cohort also shows whether a release, pricing change, or onboarding update helped or hurt, well before the effect appears in total active users.
How to Calculate Churn Rate
The standard formula divides the users lost during a period by the users present at the start of it. Choose one period length and stick to it, since monthly and annual churn are not directly comparable.
| Term | Formula | Example |
|---|---|---|
| Customer churn rate | Users lost in period / Users at start of period x 100 | 80 lost / 1,000 at start = 8% monthly churn |
| Revenue churn rate | Recurring revenue lost in period / Recurring revenue at start x 100 | $4,000 lost / $50,000 = 8% revenue churn |
| Annualized churn | 1 - (1 - monthly churn)^12 | 8% monthly churn compounds to about 63% per year |
| Retention rate | 100% - churn rate | 8% churn = 92% retention |
Worked example: an app starts March with 10,000 monthly active users. By the end of March, 1,200 of those users have not returned. Churn rate for March is 1,200 / 10,000 = 12%. New users acquired during March are excluded from the calculation, otherwise growth masks the loss.
Healthy benchmarks vary by category. Subscription consumer apps often see 5-10% monthly churn, while free social and messaging apps measure churn as inactivity and typically compare against their own DAU/MAU ratio rather than an industry number.
Churn Rate and social.plus
Most churn happens quietly: users do not cancel, they simply stop opening the app. social.plus provides engagement infrastructure that gives users a reason to come back, including feeds, groups, chat, and live streaming inside the app itself. Across published social.plus data, apps that add these social and interactive experiences see retention lifts in the 10-35% range. Smart Fit, a social.plus customer, grew its in-app community 60% month over month after launching social features, turning a transactional fitness app into a daily habit for its users.
Key Takeaways
- Churn rate is the share of users who stop using an app or cancel during a set period, and it is the inverse of retention rate.
- Calculate it as users lost divided by users at the start of the period, excluding new users acquired during that period.
- A seemingly small 8% monthly churn compounds to roughly 63% of users lost over a year.
- Adding in-app social features is one of the most direct ways to reduce churn, with published retention lifts of 10-35%.