SaaS Customer Lifetime Value (LTV) Calculator
Calculate customer lifetime value from your ARPU, churn rate, and gross margin. See LTV:CAC ratio and how reducing churn increases the long-term value of every subscriber.
Total MRR divided by the number of active paying subscribers.
The percentage of customers who cancel each month. Most SaaS businesses see 3-8%.
Revenue minus cost of goods sold (hosting, infrastructure, support). Most SaaS companies sit between 70-85%.
Total sales and marketing spend divided by new customers acquired. Learn more about CAC.
Customer lifetime value
$784
LTV with 1% less churn
$980
Avg. customer lifetime
20 months
Reducing your churn rate by just 1% would increase LTV by $196 per customer.
Your 5.2:1 LTV:CAC ratio is above the 3:1 SaaS benchmark. You may have room to invest more aggressively in acquisition.
How to calculate SaaS lifetime value
Lifetime value: LTV = (ARPU × Gross Margin) / Monthly Churn Rate. If your average customer pays $49/month at 80% gross margin with 5% monthly churn, the expected lifetime value is $784. Without gross margin, the simpler version is just ARPU / Churn Rate.
Customer lifetime: Average Lifetime = 1 / Monthly Churn Rate. At 5% monthly churn, the average customer stays for 20 months.
The churn lever: Small reductions in churn have an outsized impact on LTV. Going from 5% to 4% monthly churn increases LTV by 25%. Recovering failed payments through dunning is the fastest way to reduce churn without product changes or marketing spend.
Most SaaS businesses use LTV to set acquisition budgets. The standard benchmark is an LTV:CAC ratio of at least 3:1. Below that, you're spending more to acquire customers than they'll ever return. The fastest way to improve the ratio is reducing churn, not raising prices.
Gross margin matters because not every dollar of revenue is profit. Most SaaS companies sit between 70-85% gross margin. Infrastructure costs, support, and third-party API fees eat into what's left. Factoring margin into your LTV calculation gives you a more realistic picture of the actual value each customer generates over their lifetime.
What is a good LTV for a SaaS company?
The number itself depends on your price point and market. A $29/month product with 3% monthly churn has an LTV of roughly $967. A $199/month product with the same churn has an LTV of $6,633. The absolute LTV matters less than the ratio to your acquisition cost.
LTV:CAC benchmarks: 3:1 is the standard target. Below 1:1 means you're losing money on every customer. Between 1:1 and 3:1, the economics are tight and any spike in churn puts you underwater. Above 5:1 might sound ideal, but it often signals you're underinvesting in growth and leaving market share to competitors.
In practice, improving LTV:CAC is faster through the denominator (reducing churn to increase LTV) than the numerator (cutting acquisition spend). That's why win-back campaigns and dunning have such high ROI.
Increase your customer lifetime value
Recover failed payments and reduce involuntary churn automatically. ChurnWard starts at $29/month with no percentage fees.