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SaaS Churn Rate & LTV Calculator

Calculation Results

Customer Churn Rate: 0%

Avg. Customer Lifetime: 0 Months

Customer Lifetime Value (LTV): $0.00

function calculateSaaS() { var startC = parseFloat(document.getElementById('startCustomers').value); var lostC = parseFloat(document.getElementById('lostCustomers').value); var arpu = parseFloat(document.getElementById('arpu').value); var margin = parseFloat(document.getElementById('margin').value) / 100; if (isNaN(startC) || isNaN(lostC) || isNaN(arpu) || startC 0 ? (1 / churnRate) : 0; // LTV Calculation: (ARPU * Lifetime * Margin) var ltv = arpu * lifetime * margin; // Display results document.getElementById('results-box').style.display = 'block'; document.getElementById('resChurn').innerText = churnPercent.toFixed(2) + "%"; if (churnRate === 0) { document.getElementById('resLifetime').innerText = "Infinite (No churn)"; document.getElementById('resLTV').innerText = "N/A (No churn)"; } else { document.getElementById('resLifetime').innerText = lifetime.toFixed(1) + " Months"; document.getElementById('resLTV').innerText = "$" + ltv.toLocaleString(undefined, {minimumFractionDigits: 2, maximumFractionDigits: 2}); } }

Understanding SaaS Churn and Customer Lifetime Value (LTV)

In the world of Software as a Service (SaaS), two metrics reign supreme: Churn Rate and Customer Lifetime Value (LTV). Understanding these allows founders and growth marketers to measure the health of their subscription business and determine how much they can afford to spend on customer acquisition (CAC).

What is Customer Churn Rate?

Churn rate is the percentage of customers who cancel their subscription within a specific timeframe. It is a direct reflection of product-market fit and customer satisfaction. A high churn rate indicates a "leaky bucket" problem—where you lose customers as fast as you acquire them.

How to Calculate LTV

LTV represents the total gross profit a customer is expected to generate over the entire duration of their relationship with your company. The formula used in this calculator is:

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

By including the Gross Margin, you get a much more accurate representation of the actual cash flow available to the business after covering the Cost of Goods Sold (COGS) like hosting and support.

Real-World Example

Imagine your SaaS has the following stats:

• Starting Customers: 1,000
• Lost Customers: 20 per month (2% Churn)
• ARPU: $100
• Gross Margin: 80%

In this scenario, your Churn Rate is 2%. This implies a Customer Lifetime of 50 months (1 / 0.02). Your LTV would be $4,000 ($100 * 50 * 0.80). This means you could theoretically spend up to $1,333 to acquire a customer (using the 3:1 LTV to CAC ratio rule) and still have a highly healthy business.

How to Improve Your Metrics

To increase your LTV, you have three primary levers:

1. Reduce Churn: Improve product onboarding and customer success to keep users longer.
2. Increase ARPU: Use expansion revenue, upsells, and tiered pricing to get more value from existing users.
3. Optimize Margin: Reduce infrastructure costs and automate support to keep more of every dollar earned.