DistroFit tools · Churn ceiling
Where does your growth top out?
Customers added a month and churn in, the most you will ever have out.
Ceiling
80
Adding 4 customers a month at 5% churn, this tops out at 80 customers and £95,040 a year. It does not matter how long you run it.
- Revenue a year at the ceiling
- £95,040
The arithmetic
Every month you add some customers and lose a percentage of the ones you have. The loss grows with the count, the adds do not, so there is a point where they cancel and the count stops. That point is the adds divided by the churn rate. Adding 4 customers a month at 5% churn, you lose 4 a month once you have 80, and 80 is where it stays. Run it for a year or a decade and the answer is the same.
The revenue ceiling is that count times your monthly price times twelve. At £99 a month, 80 customers is £95,040 a year. Give it a target and it also says how many months the climb takes, or that the target sits above the ceiling and this rate never gets there. With no churn there is no ceiling, and the months are simply the customers needed divided by the adds.
Two ways to raise the ceiling: add more customers a month, or lose fewer. Halving churn doubles it. So does doubling the adds, which is usually the harder of the two.
The ceiling at common rates
Customers, at any price. The count does not depend on what you charge.
| Added / month | 2% churn | 3% churn | 5% churn | 8% churn | 10% churn |
|---|---|---|---|---|---|
| 1 | 50 | 33 | 20 | 13 | 10 |
| 2 | 100 | 67 | 40 | 25 | 20 |
| 4 | 200 | 133 | 80 | 50 | 40 |
| 8 | 400 | 267 | 160 | 100 | 80 |
| 16 | 800 | 533 | 320 | 200 | 160 |
| 32 | 1,600 | 1,067 | 640 | 400 | 320 |
Customers needed runs backwards, from a target to the count it takes. This runs forwards, from the rate you actually add customers at to the most that rate can ever produce. DistroFit reads your site and says which channels can raise the rate.