Defining Churn Rate (no really, this actually requires an entire blog post) - Shopify

This post details the evolution of churn rate calculation at Shopify, moving from problematic accounting-based definitions to a more robust, timely, and current approach. It explores various definitions, highlights their shortcomings (e.g., influence of new customers, assumption of even churn distribution, lack of timeliness and currency), and proposes a final definition that uses daily customer counts and cancellations, weighted by the probability of being active. This refined metric aims to be current, timely, comparable across period lengths, and reflective of actual churn behavior changes.