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Comment by devongall | Hacker News Reader

It's a distinction between Revenue Churn and Customer Churn. If customer A cancels their account, it is a loss of 1 account. You can't really have negative customer churn.

Revenue churn would be Customer A cancels their account which was worth $5/month. But if customer B upgrades their existing account by $10/month, you would have negative revenue churn. The negative churn here is negative Revenue churn, ie. upgrades outpace cancelations.

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The idea of revenue churn is startup biz hype. This is how startups play with numbers to make their business seem better than its really doing. You can't make solid business decisions based on a framework of revenue churn since it hides real business issues. The real issue with churn rate is that you have users leaving the service. If you want to better your business you want to reduce this number and get it as close to 0 as possible. Revenue churn would hide this and make it think you're doing well, when in fact you're not. You could be facing a dwindling user base with just a small number of high paying users.

Totally, reminds of the late 90s when companies were reported to move money around in circles to increase revenue. Company A pays B, B pays C, C pays A. Lots of money exchanging hands, zero profit, infinite revenue!

Wouldn't given that ever freemium model (e.g. $0 -> $15) then automatically create negative churn? Doesn't it make more sense to track first-time purchases/upgrades and future upgrades together? Because if I am tracking revenue oriented I am not really interested in tracking customer growth but revenue growth

In a freemium model, looking at Revenue churn on the $0 accounts would definitely give you a pretty useless metric.

For some metrics it makes sense to lump the two together. But the distinction between the two is helpful for measuring a product's ability to up-sell itself to the existing customer base.

If you're interested in tracking revenue growth instead of customer growth - then say you have -1% revenue churn month/month, your existing customer base is going to be paying you 1% more the next month (even though you may lose a few customers along the way).

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