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SaaS Growth & Churn Calculator

function calculateSaaSMetrics() { var start = parseFloat(document.getElementById('startCustomers').value); var lost = parseFloat(document.getElementById('lostCustomers').value); var added = parseFloat(document.getElementById('newCustomers').value); var arpuValue = parseFloat(document.getElementById('arpu').value); var marginPct = parseFloat(document.getElementById('margin').value); if (isNaN(start) || start 0) { ltv = (arpuValue * (marginPct / 100)) / (churnRate / 100); } else { ltv = (arpuValue * (marginPct / 100)) / 0.0001; // Avoid infinity, show very high value } document.getElementById('resChurn').innerText = churnRate.toFixed(2) + "%"; document.getElementById('resLTV').innerText = "$" + ltv.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); document.getElementById('resMRR').innerText = "$" + mrr.toLocaleString(); document.getElementById('resGrowth').innerText = growthRate.toFixed(2) + "%"; document.getElementById('results').style.display = 'block'; }

Understanding SaaS Metrics: Churn and Lifetime Value (LTV)

In the Software as a Service (SaaS) business model, growth is not just about acquiring new customers; it's about retaining them. This calculator helps you analyze the critical relationship between customer attrition and long-term profitability.

What is Customer Churn?

Customer Churn is the percentage of customers that leave your service over a specific period. A high churn rate is a "leaky bucket" that forces you to spend more on customer acquisition just to stay flat. In this calculator, we use the Starting Customers and Lost Customers to determine your monthly churn percentage.

Calculating Lifetime Value (LTV)

LTV represents the total revenue you can expect from a single customer account throughout their relationship with your company. The formula used here is:

LTV = (ARPU × Gross Margin %) / Churn Rate

This metric tells you how much you can afford to spend on Customer Acquisition Cost (CAC). Ideally, your LTV should be at least 3x your CAC.

Practical Example

Imagine your SaaS company starts the month with 1,000 customers. During the month, you lose 50 customers but sign up 120 new ones. Your average revenue per user (ARPU) is $50 and your gross margin is 80%.

• Churn Rate: (50 / 1,000) = 5% per month.
• Ending MRR: (1,000 – 50 + 120) × $50 = $53,500.
• LTV: ($50 × 0.80) / 0.05 = $800.00.

This means every customer you acquire is worth $800 in gross profit over their lifetime. If your cost to acquire a customer (CAC) is $200, you have a healthy 4:1 LTV/CAC ratio.

How to Improve Your Metrics

1. Reduce Churn: Focus on customer success and product-market fit to lower the denominator in the LTV formula.
2. Increase ARPU: Use upselling, cross-selling, or value-based pricing to increase the revenue per user.
3. Optimize Margin: Lower server costs or automate support to keep more of every dollar earned.