Customers with $0 subscriptions: churn or downgrades?
Update: This feature was previously only available for Stripe, Chargebee, Recurly, and Braintree. It’s now available for new customers with any billing source. We will enable this data setting for current customers with other billing integrations over the next few weeks. Get in touch if you want us to switch it on for you now.
When a paying subscriber is given a 100% discount, or moved from a paid plan to a free plan, their Monthly Recurring Revenue (MRR) drops to $0. But is this a downgrade (Contraction MRR) or a cancellation (Churn MRR)?
ChartMogul customers are divided on how we should classify these events – and the decision always depends on the specific dynamics of each business.
Currently we’re classifying these events as downgrades rather than churn. Therefore, customer churn rate isn’t currently being impacted by these events, although MRR churn rate is.
When there’s no universal way of doing something the best thing we can do is provide you with the option. So today we are releasing a new switch you’ll find under Admin > Data settings > Free customer handling:
Please note: if you do select the second option, customers who are moved from a paid plan to a free plan, or are given a 100% discount, will start to impact your customer churn numbers and will stop impacting your downgrade/contraction numbers.