In Chargebee, churn is typically calculated based on the loss of customers or revenue over a given period. However, when it comes to a price decrease, the way churn is determined can vary depending on the type of churn being measured:
1. Customer Churn
- If a customer downgrades to a lower-priced plan or their subscription amount decreases, Chargebee does NOT count this as customer churn because the customer is still active and retained.
- Customer churn is only recorded when a customer cancels their subscription or fails to renew it.
2. Revenue Churn (or MRR Churn)
A price decrease will typically reflect in revenue churn (also known as contraction), even if the customer is retained. This happens in the following cases:
- If a customer downgrades to a lower-tier plan.
- If a discount or promotional offer reduces the subscription value.
- If the overall billing amount decreases due to fewer add-ons or other adjustments.
Example:
- If a customer switches from a $100/month plan to a $70/month plan:
- Customer churn = because the customer is still retained
- Revenue churn = $30 loss would be recorded as contraction or revenue churn
? Key Insight:
Chargebee separates customer churn and revenue churn to give you a clearer picture of how your customer base and revenue are evolving. A price decrease won't affect customer churn directly but will be reflected in revenue churn as a reduction in Monthly Recurring Revenue (MRR).