SaaS LTVTotal expected gross profit from a customer over their entire subscription lifetime.
ARPUAverage Revenue Per User (or Account) — typically measured monthly for SaaS businesses.
Gross MarginRevenue minus direct costs (hosting, support, onboarding) as a percentage of revenue.
Customer LifespanThe average duration a customer remains a paying subscriber before churning.
Expansion RevenueAdditional revenue from existing customers through upgrades, add-ons, or increased usage.
CACCustomer Acquisition Cost — the total sales and marketing spend needed to acquire one new paying customer.
LTV:CAC RatioThe ratio of lifetime value to acquisition cost. The industry benchmark for healthy SaaS growth is 3:1 or higher.
Churn RateThe percentage of customers who cancel their subscription in a given period. Monthly churn of 2% compounds to ~21.5% annual churn.
Net Revenue Retention (NRR)The percentage of recurring revenue retained from existing customers, including expansion. NRR above 100% means cohort revenue grows even without new customers.
LTV = ($4,200 × 0.75 × 1.015) / (0.008 − 0.015) — net negative churn: theoretically unbounded. Try it: enter these values with Expansion Rate set to 1.5%.
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Calculating SaaS Customer Lifetime Value
LTV Drives Every Decision
LTV determines how much you can afford to spend on acquisition (CAC), which customer segments to target, and where to invest in product development. A segment with $8,000 LTV can justify a $2,000 CAC with inside sales, while a $500 LTV segment needs self-serve acquisition at under $150 CAC. Segment-level LTV analysis often reveals that 20% of customer types drive 80% of total lifetime value.
The Power of Expansion Revenue
With a monthly expansion rate exceeding churn, LTV becomes theoretically infinite (in practice, limited by market size). This is net negative revenue churn — the holy grail of SaaS. Usage-based pricing, tiered seats, and add-on products create natural expansion. Companies like Snowflake and Twilio achieve 130-170% NRR, meaning each cohort's revenue grows 30-70% annually without any new customer acquisition.
Cumulative Revenue vs. CAC Payback
Interpretation
Frequently Asked Questions
Is the SaaS LTV Calculator — Customer Lifetime Value free to use?+
Yes, the SaaS LTV Calculator — Customer Lifetime Value is completely free with no sign-up required. All calculations run locally in your browser — your data is never sent to a server.
How accurate is the SaaS LTV Calculator — Customer Lifetime Value?+
The calculator uses industry-standard formulas and is designed for estimation and planning purposes. For critical decisions, always consult a qualified professional in the relevant field.
Can I save or share my results?+
Yes! Click the Share button to generate a link with your inputs pre-filled. You can also use the Copy button to copy results to your clipboard.
Does the SaaS LTV Calculator — Customer Lifetime Value work on mobile?+
Absolutely. The calculator is fully responsive and works on phones, tablets, and desktops. Results update instantly as you type on any device.
What formulas does this calculator use?+
The SaaS LTV Calculator — Customer Lifetime Value uses standard saas ltv formulas accepted in the field. Check the Formula section above for specific equations and methodology.
Related Calculators
Related Guides & Articles
SaaS LTV by Churn Rate ($100/mo ARPU, 80% Margin)
Monthly Churn
Lifespan
LTV
LTV:CAC (at $500 CAC)
1%
100 months
$8,000
16:1
2%
50 months
$4,000
8:1
3%
33 months
$2,667
5.3:1
5%
20 months
$1,600
3.2:1
8%
12.5 months
$1,000
2:1
Frequently Asked Questions
SaaS LTV is the total gross profit a business expects to generate from a single customer over the entire duration of their subscription. Calculated as: LTV = (Monthly ARPU × Gross Margin %) / Monthly Churn Rate. A higher LTV means each customer contributes more to your business over their lifetime.
The industry benchmark for a healthy SaaS business is an LTV:CAC ratio of 3:1 or higher — your lifetime value should be at least 3× what you spend to acquire a customer. A ratio below 1:1 means you lose money on every customer. Ratios above 5:1 are excellent but may indicate you are underinvesting in growth. Y Combinator considers 3:1 the threshold for fundable unit economics.
Churn has an inverse and exponential impact on LTV. Since LTV = Gross Profit / Churn Rate, cutting your monthly churn in half doubles your LTV. Going from 5% to 2.5% monthly churn doubles every customer's lifetime value. Reducing churn is typically the highest-leverage action a SaaS company can take.
Monthly churn is the percentage of customers who cancel in a given month; annual churn is the percentage who cancel over a full year. They are not simply multiplied by 12. The correct conversion is: Annual Churn = 1 − (1 − Monthly Churn)^12. For example, 2% monthly churn equals ~21.5% annual churn, not 24%. This compounding effect is why even small improvements in monthly churn have dramatic annual impact.
The basic LTV formula uses static ARPU and does not model expansion. For companies with strong expansion revenue, this understates true LTV. Enable the Expansion Rate input in this calculator to use the advanced formula: LTV = (ARPU × GM × (1 + Expansion Rate)) / (Churn − Expansion Rate). When expansion rate exceeds churn, the business achieves net negative churn — the holy grail of SaaS.
The most impactful ways: (1) Reduce churn through better onboarding, customer success, and product stickiness — this has the highest leverage. (2) Increase ARPU through upselling, cross-selling, or usage-based pricing expansion. (3) Improve gross margins by optimizing infrastructure costs and automating support. (4) Implement net revenue retention strategies where expansion revenue exceeds churned revenue, creating negative net churn.