Cohort revenue decay calculator
See how a cohort of recurring revenue degrades over time — and what closing the gap between your current and target churn rate is worth at months 3, 6, 12, and 24.
Enter your starting cohort MRR and current monthly churn rate. Set a target churn rate to see exactly how much revenue you protect by improving retention.
Cohort revenue decay calculator inputs and results
How cohort revenue decay works
The model applies monthly churn as a compound factor: surviving MRR at month N equals starting MRR multiplied by (1 − churn rate) raised to the power of N. This is the same mathematics as compound interest applied in reverse — instead of growing, the cohort shrinks by the same percentage each month.
Because churn compounds, the dollar impact accelerates over time. A cohort starting at $100K MRR with 3% monthly churn retains about 91% after three months but only 48% after 24 months. The gap between a 3% and 2% churn rate is small at month 3 but widens to nearly 10 percentage points by month 24 — which on a $100K cohort is roughly $10,000 in recurring revenue per month, every month, going forward.
This model does not include expansion revenue. If your customers expand over time, your cohort will retain more revenue than shown here. Use the NRR calculator to include expansion in your retention model.
About this tool
This tool models how a cohort of recurring revenue decays over time under a given monthly churn rate. Inputs: starting cohort MRR, current monthly churn rate %, target (improved) churn rate %. Output: surviving revenue at months 3, 6, 12, and 24 under both scenarios, and the dollar value of reducing churn to your target. Formula: surviving MRR at month N = starting MRR × (1 − churn rate)^N.
Frequently asked questions
What is a cohort revenue decay model?
A cohort revenue decay model starts with a fixed pool of revenue from customers who all began at the same time (a cohort) and tracks how much of that revenue survives as customers cancel over time. Unlike a blended MRR view, which adds new customers continuously, a decay model isolates what happens to a specific starting group — making it easy to see how fast revenue erodes and what retention improvements are worth.
Why doesn't the model account for expansion revenue?
This tool models gross revenue decay from a cohort with no expansion. Adding expansion would give you NRR, which is a different calculator. Keeping the model pure to churn makes the decay rate and the value of improving it more legible. If your product has significant upsell, your real-world cohort will decay more slowly than this model shows — use the NRR calculator to model that.
What's a realistic monthly churn rate?
For SMB SaaS, 2–5% monthly churn is common. For mid-market, 1–2% is typical. Enterprise contracts often have below 1% monthly churn because annual or multi-year commitments prevent in-period cancellations. Monthly churn compounds quickly: 3% monthly is roughly 31% annual churn, meaning less than 70% of a cohort survives a full year.
What does 'revenue saved' mean here?
It's the dollar difference in surviving revenue between your current churn rate and your target rate at each milestone. The gap between scenarios widens every month as compounding works against the higher churn rate. At month 24, the difference represents the recurring revenue you protected by improving retention.