Renewal rate is a key metric for subscription-based businesses that measures the percentage of customers who choose to renew their subscriptions at the end of a contract period. It is calculated using the formula: Renewal Rate = (Number of Renewals / Number of Renewal Candidates) × 100. For example, if 80 out of 100 customers renew their subscriptions, the renewal rate is 80%. This renewal rate calculator helps SaaS companies and subscription businesses track customer loyalty and predict recurring revenue.

A good renewal rate for SaaS companies typically ranges from 80-90%, though this varies by market segment and contract length. Enterprise SaaS companies often achieve 90-95% renewal rates due to longer contracts and deeper integrations. SMB-focused SaaS businesses typically see 70-85% renewal rates due to higher churn. Annual contracts generally have higher renewal rates than monthly subscriptions. Use this calculator regularly to track your renewal rate and compare against industry benchmarks for your specific segment.

Renewal rate specifically measures customers who actively choose to renew at contract end, while retention rate measures all customers who remain over a period, regardless of contract terms. Renewal rate is most relevant for businesses with defined contract periods (annual, multi-year), whereas retention rate applies to any subscription model including month-to-month. Both metrics indicate customer satisfaction, but renewal rate is a stronger indicator of deliberate customer commitment since it requires an active decision to continue.

To improve renewal rate, implement proactive customer success programs that ensure customers achieve their goals, conduct regular business reviews to demonstrate value and ROI, start renewal conversations 60-90 days before contract end, offer incentives for early renewal commitments, address customer concerns promptly throughout the contract, continuously improve product based on feedback, and identify at-risk customers early using engagement metrics. Strong onboarding, ongoing training, and clear communication of new features also significantly impact renewal decisions.

Track both customer renewal rate and revenue renewal rate (also called dollar retention rate) for complete insights. Customer renewal rate shows how many customers renew, while revenue renewal rate shows how much revenue is retained. Revenue renewal rate can exceed 100% if existing customers upgrade or expand usage. For example, if 80% of customers renew but they represent 110% of original revenue due to expansions, you have 80% customer renewal but 110% revenue renewal. This calculator focuses on customer count, but tracking both metrics provides the fullest picture of business health.