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SaaS calculator · /tools/ltv-calculator

LTV calculator: customer lifetime value for SaaS

Enter revenue per customer, gross margin, churn and acquisition cost. Get LTV, LTV:CAC and CAC payback instantly.

Customer lifetime value

$980

Gross profit per customer

Average lifetime

25.0 months

1 ÷ monthly churn

LTV : CAC

3.3 : 1

Healthy. 3:1 is the usual SaaS target.

CAC payback

7.7 months

Time to earn back CAC. Under 12 months is strong.

Revenue-based LTV (before costs) is $1,225. Use the gross-margin figure above when you set your acquisition budget.

How churn changes LTV

Monthly churnLTVLTV : CAC
1%$3,92013.1 : 1
2%$1,9606.5 : 1
3%$1,3074.4 : 1
5%$7842.6 : 1
8%$4901.6 : 1
10%$3921.3 : 1

LTV = ARPA × gross margin ÷ monthly churn

LTV : CAC = LTV ÷ CAC

CAC payback (months) = CAC ÷ (ARPA × gross margin)

Customer lifetime value (LTV) is the gross profit you can expect from a customer before they cancel. For a subscription business the standard formula is LTV = average revenue per account (ARPA) × gross margin ÷ monthly churn rate.

Enter your numbers and the calculator shows LTV, the average customer lifetime, your LTV:CAC ratio and how many months it takes to earn back what you spent to win a customer. A common SaaS benchmark is an LTV:CAC of 3:1 or better and a CAC payback under 12 months.

How it works

  1. Step 1

    Enter revenue per customer

    Use average monthly revenue per paying account. For annual plans, divide the yearly price by 12.

  2. Step 2

    Add margin and churn

    Gross margin is revenue minus hosting, support and payment costs. Churn is the share of customers who cancel each month.

  3. Step 3

    Read LTV and payback

    Add your customer acquisition cost (CAC) to see LTV:CAC and how many months a customer takes to pay back.

FAQ

What is the LTV formula for SaaS?
LTV = ARPA × gross margin ÷ monthly churn rate. With $50 ARPA, 80% gross margin and 4% monthly churn, LTV is 50 × 0.8 ÷ 0.04 = $1,000.
What is a good LTV:CAC ratio?
3:1 is the usual target for SaaS. Below 1:1 you lose money on every customer. Well above 5:1 can mean you are under-investing in growth.
How do I calculate monthly churn?
Divide the customers who cancelled during the month by the customers you had at the start of the month. 8 cancellations out of 200 customers is 4% monthly churn.
My churn is annual. How do I convert it?
Monthly churn = 1 − (1 − annual churn)^(1/12). 30% annual churn is about 2.9% a month.
Should LTV use revenue or gross margin?
Gross margin. Revenue-based LTV ignores what it costs to serve the customer, so it overstates what each customer is worth. The calculator shows both.
How do I calculate CAC?
Add up sales and marketing spend for a period, including ads, tools and salaries, then divide by the new paying customers won in that period.

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