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SaaS Customer Lifetime Value (LTV) Calculator

Calculate the projected revenue a single customer will generate over their lifespan with your SaaS business.

Your profit margin after serving costs (e.g., 80 for 80%).

The percentage of MRR lost each month (e.g., 5 for 5%).

Estimated Customer Lifetime Value:

Average Customer Lifespan: months

function calculateSaasLTV() { var arpaInput = document.getElementById("saasArpa").value; var marginInput = document.getElementById("saasGrossMargin").value; var churnInput = document.getElementById("saasChurnRate").value; var arpa = parseFloat(arpaInput); var marginPercent = parseFloat(marginInput); var churnPercent = parseFloat(churnInput); var resultContainer = document.getElementById("ltvResultContainer"); var ltvOutput = document.getElementById("ltvOutput"); var lifespanOutput = document.getElementById("lifespanOutput"); // Input validation if (isNaN(arpa) || arpa <= 0 || isNaN(marginPercent) || marginPercent < 0 || isNaN(churnPercent) || churnPercent 100) { alert("Gross Margin cannot exceed 100%."); resultContainer.style.display = "none"; return; } // Convert percentages to decimals for calculation var marginDecimal = marginPercent / 100; var churnDecimal = churnPercent / 100; // Calculate Average Customer Lifespan (1 / Churn Rate) var lifespanMonths = 1 / churnDecimal; // Calculate LTV: (ARPA * Gross Margin %) / Churn Rate % var ltv = (arpa * marginDecimal) / churnDecimal; // Display results resultContainer.style.display = "block"; ltvOutput.innerText = "$" + ltv.toFixed(2).replace(/\d(?=(\d{3})+\.)/g, '$&,'); lifespanOutput.innerText = lifespanMonths.toFixed(1); }

Understanding SaaS Customer Lifetime Value (LTV)

For Software-as-a-Service (SaaS) businesses, Customer Lifetime Value (LTV or CLV) is a critical metric that estimates the total gross profit a customer will generate for your company throughout their entire relationship with your service. Understanding LTV is essential for determining how much you can afford to spend on acquiring new customers (Customer Acquisition Cost, or CAC).

This calculator uses the standard SaaS LTV formula which considers monthly revenue, gross margins, and revenue churn.

Key Inputs Defined:

• Average Revenue Per Account (ARPA) – Monthly: This is the average amount of Monthly Recurring Revenue (MRR) you receive from a single active customer account.
• Gross Margin (%): This is the percentage of revenue retained after subtracting the direct costs associated with serving the customer (e.g., hosting costs, third-party license fees, support staff salaries). In SaaS, high gross margins (often above 70-80%) are typical.
• Monthly Revenue Churn Rate (%): The percentage of MRR lost each month due to customers canceling or downgrading their subscriptions. This is the inverse of customer retention.

The SaaS LTV Formula Used:

The calculation performed is: LTV = (ARPA × Gross Margin %) / Monthly Churn Rate %

LTV Calculation Example

Let's imagine a typical B2B SaaS company with the following metrics:

• They charge an average of $150 per month per account (ARPA).
• Their cost to serve is low, resulting in an 85% Gross Margin.
• They experience a monthly revenue churn of 2.5%.

Using the calculator above:

This means, on average, each new customer is worth $5,100 in gross profit over their lifetime. A healthy SaaS business typically aims for an LTV to CAC ratio of 3:1 or higher, meaning they would spend no more than roughly $1,700 to acquire this customer.