Renewal Rate
Percentage of contracts or subscriptions renewed at their expiry date
What is Renewal Rate?
Renewal rate is the percentage of contracts due for renewal that are renewed. It shows how well a business keeps customers at the end of their agreements.
Renewals are the foundation of predictable recurring revenue, so tracking the rate gives an early view of customer loyalty.
How this KPI is measured
- Function
- Customer Success & Service
- Sub-function
- Revenue Retention
- Industry
- All Industries
- Type
- Lagging
- Impact
- Revenue
- Unit
- %
- Measurement frequency
- Monthly / Quarterly
- Formula
- (Contracts renewed / Contracts due for renewal) × 100
How to calculate it
Divide contracts renewed by contracts due for renewal, and multiply by 100.
For example, if 180 of 200 contracts due were renewed, the rate is 90%.
Measure by count and by value, since large customers may renew or leave differently from small ones. Include only contracts that actually reached their renewal date.
Where it is used
Forecasting revenue
Estimate renewals.
Measuring customer loyalty
Track retention.
Planning customer success
Focus on renewals at risk.
How to improve it
Tips and common mistakes
- Measure value as well as count.
- Watch renewals at reduced value.
- Start conversations early.
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