What is Downgrade %?
Downgrade % is the percentage of customers who move from a higher-priced plan to a lower-priced plan. In other words, it measures the rate at which your customers are downgrading their subscription. This metric is closely related to churn, as customers who are downgrading may be more likely to cancel their subscription altogether in the future.
Why Downgrade % Is Important
Tracking Downgrade % is important for several reasons. First, it can provide insight into customers' changing needs and priorities. If a significant number of customers are downgrading, it may indicate that they are not seeing enough value in the higher-priced plans. Additionally, it can help identify areas of the product or service that may be causing customers to downgrade, allowing the company to make improvements and retain more customers.
Additionally, tracking Downgrade % can help forecast revenue and plan for future growth. By understanding how many customers are downgrading and by how much, a company can better predict Monthly Recurring Revenue (MRR) and make more accurate revenue forecasts. This can help to make informed decisions about future investments in product or marketing.
How to Calculate Downgrade %
To calculate Downgrade %, you need to know the total number of customers who have downgraded their plan over a given period, as well as the total number of customers who are currently subscribed to your service. The formula for calculating Downgrade % is:
Downgrade % = (# Customers Who Downgraded / Total # of Customers) x 100
For example, let's say you have 1,000 total customers, and 100 of them have downgraded their plan in the last month. To calculate your Downgrade rate for the month, you would use the following formula:
Downgrade % = (100 / 1,000) x 100 = 10%
In this example, the Downgrade % for the month is 10%.