Churn rate measures how many customers cancel their subscription, or how much revenue is lost, over a defined period. It is one of the most critical metrics for subscription businesses, as high churn directly undermines growth.

Example: A SaaS company starts the month with 500 customers and loses 15 by month end. The monthly customer churn rate is 3%. If monthly revenue churn is tracked, the calculation is based on MRR lost instead of customer count.