Cancellation rate is a metric that shows how well a business is doing. For example, when the business is about mediating car rental bookings, this rate can be calculated as a percentage of bookings out of all bookings that are cancelled in a given time period. A high cancellation rate indicates that the business is not going well.
Cancellation rate can be calculated in various ways depending on the question that one needs answers for. For example, in the SaaS business model, it can refer to the percentage of new customers in a given month that end up cancelling at a later date. Or the percentage of current customers that have cancelled in a given time period. When calculating the cancellation rate, it is important to think about what is the question you are looking for an answer to.