Improved Revenue Churn Calculation
Improvement
We've updated our revenue churn calculation to enhance its accuracy. Our previous calculation could lead to inaccurately high churn percentages, occasionally exceeding 100%.
This issue primarily impacted new companies or newly added plans, where adjustments in MRR were more likely to produce inflated churn percentages. For established companies or longer-standing plans, this issue was less impactful.
Previously, when a customer upgraded their plan mid-period and then churns, the churn was calculated based on the most recent (higher) MRR, divided by the MRR base from 30 days prior. This inflated the churn percentage disproportionately.
Now, the Churn percentage will not exceed 100%.
Example
- Scenario: A customer upgraded from a $500 plan to $1,379 and subsequently churned.
- Previous Calculation: The churn percentage was calculated as $1,379 (new MRR) / $500 (initial MRR), yielding a 275.8% churn rate.
- Improved Calculation: It is now calculated based on the initial MRR base, capping the churn at 100% where relevant. In this example, churn should be $500 / $500 = 100%.
over 1 year ago