💼 SaaS Lifetime Value Calculator
Calculate Customer Lifetime Value for SaaS
Monthly recurring revenue per customer
Gross profit margin percentage
Percentage of customers lost per month
How to Use This Calculator
Enter Average Revenue Per User (ARPU)
Input your monthly recurring revenue per customer. This is typically your subscription price per customer per month.
Enter Gross Margin
Input your gross profit margin as a percentage. This is (Revenue - Cost of Goods Sold) / Revenue × 100%.
Enter Monthly Churn Rate
Input your monthly customer churn rate as a percentage. This is the percentage of customers who cancel their subscription each month.
Review Results
Use the LTV to understand customer value, set customer acquisition budgets, and optimize pricing strategies.
Formula
Customer Lifetime Value (LTV):
LTV = (ARPU × Gross Margin %) / Churn Rate %
Average Customer Lifespan:
Average Lifespan = 1 / Churn Rate
Example: SaaS Subscription
ARPU: $100/month, Gross Margin: 80%, Churn Rate: 5%/month
Average Lifespan: 1 / 0.05 = 20 months
LTV: ($100 × 0.80) / 0.05 = $80 / 0.05 = $1,600
✅ Customer worth $1,600 over lifetime
About SaaS Lifetime Value Calculator
The SaaS Lifetime Value (LTV) Calculator helps SaaS businesses calculate the total value a customer brings over their entire relationship with the company. This critical SaaS metric combines revenue per customer, profit margins, and churn rate to determine customer lifetime value, helping you make informed decisions about customer acquisition costs, pricing strategies, and retention efforts.
When to Use This Calculator
- Customer Acquisition: Determine how much you can spend to acquire customers (LTV:CAC ratio)
- Pricing Strategy: Evaluate pricing strategies and their impact on customer value
- Churn Analysis: Understand the impact of churn on customer lifetime value
- Marketing Budget: Set marketing budgets based on customer lifetime value
- Product Development: Prioritize features that improve retention and increase LTV
- Investor Reporting: Report key SaaS metrics to investors and stakeholders
Why Use Our Calculator?
- ✅ Quick Calculation: Instantly calculate LTV from ARPU, margin, and churn
- ✅ Standard Formula: Uses industry-standard SaaS LTV formula
- ✅ Multiple Insights: Shows LTV, average lifespan, and related metrics
- ✅ Clear Results: Easy-to-understand display of customer value
- ✅ Free Tool: No cost for essential SaaS metrics
Common Applications
- SaaS Companies: Calculate LTV for subscription businesses
- Investor Relations: Report key metrics to investors
- Marketing Planning: Plan customer acquisition budgets
- Product Strategy: Make product decisions based on customer value
Tips for Best Results
- Accurate ARPU: Use average revenue per user, accounting for different pricing tiers
- Real Gross Margin: Use actual gross margin, not just revenue
- Monthly Churn: Use monthly churn rate (not annual) for accurate calculation
- Segment Analysis: Calculate LTV for different customer segments separately
- Regular Updates: Recalculate LTV as metrics change over time
Frequently Asked Questions
What's a good LTV for SaaS?
Good LTV depends on your business model. However, a good LTV:CAC ratio is typically 3:1 or higher, meaning LTV should be at least 3x your Customer Acquisition Cost. Higher LTV allows more spending on acquisition. Focus on improving LTV through higher ARPU, better margins, and lower churn.
How do I calculate LTV with annual subscriptions?
For annual subscriptions, convert to monthly: divide annual revenue by 12 for ARPU. Or use annual churn rate: divide annual churn by 12 for monthly churn. Alternatively, use annual formula: LTV = (Annual Revenue × Gross Margin %) / Annual Churn Rate %.
Should I use gross margin or net margin?
Use gross margin for LTV calculation. Gross margin accounts for cost of goods sold (COGS) but not operating expenses. This gives you the profit from each customer that can be used to cover acquisition costs. Net margin includes all expenses and is less relevant for customer acquisition decisions.
How does churn rate affect LTV?
Churn rate directly impacts LTV - lower churn means higher LTV. For example, reducing churn from 5% to 3% increases average customer lifespan from 20 to 33 months, significantly increasing LTV. Focus on reducing churn through better product, customer success, and retention strategies.
Can I calculate LTV for different customer segments?
Yes! Calculate LTV separately for different segments (by plan, industry, acquisition channel, etc.). This helps you understand which customers are most valuable and where to focus acquisition efforts. Different segments may have different ARPU, margins, and churn rates.
How do I use LTV to set customer acquisition budgets?
Use LTV:CAC ratio to set acquisition budgets. Aim for LTV:CAC of 3:1 or higher. If LTV is $1,500, you can spend up to $500 on acquisition (CAC) for a 3:1 ratio. However, also consider payback period - aim to recover CAC within 12 months for healthy cash flow.