{"id":22101,"date":"2024-11-13T14:19:36","date_gmt":"2024-11-13T13:19:36","guid":{"rendered":"https:\/\/chartmogul.com\/blog\/?p=22101"},"modified":"2024-12-18T08:07:27","modified_gmt":"2024-12-18T07:07:27","slug":"when-should-you-recognize-churn","status":"publish","type":"post","link":"https:\/\/chartmogul.com\/blog\/when-should-you-recognize-churn\/","title":{"rendered":"When should you recognize churn?"},"content":{"rendered":"\n

Deciding when to classify a customer as \u201cchurned\u201d isn\u2019t always straightforward. The right time depends on the nature of your product, billing cycles, and the typical behavior of your customers. Exactly when churn is recognized is often different between SaaS companies.<\/p>\n\n\n\n

ChartMogul allows you to choose when you want churn to be recognized.<\/strong> We support three options out of the box:<\/p>\n\n\n\n

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  1. Recognize churn as soon as the customer clicks \u201ccancel.\u201d<\/a><\/li>\n\n\n\n
  2. Recognize churn at the end of the paid subscription period.<\/a><\/li>\n\n\n\n
  3. Recognize churn when the subscription ends in your billing system.<\/a><\/li>\n<\/ol>\n\n\n\n

    Deciding on which churn recognition option to use can be difficult. Let\u2019s look at each option in detail to help you decide the best method to recognize churn for your business.<\/p>\n\n\n\n

    Recognizing churn as soon as the customer clicks \u201ccancel\u201d<\/h2>\n\n\n\n

    When a customer clicks “cancel,” they might reactivate someday, but for now, they\u2019ve clearly decided to churn. Recognizing this churn as soon as the customer cancels lets you immediately realize the loss in your SaaS metrics, even if you\u2019re still providing the service until the subscription ends\/expires.<\/p>\n\n\n\n

    This approach gives you a more forward-looking view of your MRR, bringing it closer to the definition of Committed Monthly Recurring Revenue<\/a> (CMRR). CMRR is a projection of MRR into the future. It considers any committed revenue addition (including new business, expansion, reactivation) and scheduled churn or contraction.<\/p>\n\n\n\n

    Recognizing churn as soon as the customer clicks \u201ccancel\u201d is a good option if: <\/h3>\n\n\n\n