Wells Fargo Refinance Rates Calculator

SaaS Customer Lifetime Value (LTV) Calculator

Must be greater than 0.

Results

Estimated Customer Lifetime:

Customer Lifetime Value (LTV):

function calculateCLV() { // 1. Get input values based on EXACT IDs match var arpuInput = document.getElementById('clv-arpu').value; var churnInput = document.getElementById('clv-churn').value; var marginInput = document.getElementById('clv-margin').value; var resultDiv = document.getElementById('clv-result'); var resultMonths = document.getElementById('clv-result-months'); var resultValue = document.getElementById('clv-result-value'); // 2. Parse values to floats var arpu = parseFloat(arpuInput); var churnPercent = parseFloat(churnInput); var marginPercent = parseFloat(marginInput); // 3. Validation and Edge Case Handling // Ensure inputs are numbers. Churn must be > 0 to avoid division by zero. ARPU and Margin shouldn't be negative. if (isNaN(arpu) || isNaN(churnPercent) || isNaN(marginPercent) || arpu < 0 || marginPercent < 0) { alert("Please enter valid non-negative numeric values for ARPU and Margin."); resultDiv.style.display = 'none'; return; } if (churnPercent 100) { alert("Monthly Churn Rate must be greater than 0% and less than or equal to 100%."); resultDiv.style.display = 'none'; return; } if (marginPercent > 100) { alert("Gross Margin cannot exceed 100%."); resultDiv.style.display = 'none'; return; } // 4. The Math (SaaS LTV Formula) // Convert percentages to decimals var churnDecimal = churnPercent / 100; var marginDecimal = marginPercent / 100; // Calculate Average Customer Lifetime in Months (1 / Churn Rate) var lifetimeMonthsCalc = 1 / churnDecimal; // Calculate LTV: (ARPU * Gross Margin %) / Churn Rate % var ltvCalc = (arpu * marginDecimal) / churnDecimal; // 5. Format and Display Results // Show the result container resultDiv.style.display = 'block'; // Update output elements with formatted numbers resultMonths.innerHTML = lifetimeMonthsCalc.toFixed(1) + " Months"; // Format currency using Intl.NumberFormat for robustness var currencyFormatter = new Intl.NumberFormat('en-US', { style: 'currency', currency: 'USD', minimumFractionDigits: 2, maximumFractionDigits: 2 }); resultValue.innerHTML = currencyFormatter.format(ltvCalc); }

Understanding SaaS Customer Lifetime Value (LTV)

For Subscription-as-a-Service (SaaS) businesses, Customer Lifetime Value (LTV or CLV) is perhaps the most critical metric to track outside of Monthly Recurring Revenue (MRR). It represents the total estimated revenue a typical customer will generate during their entire relationship with your company after accounting for the direct costs of servicing them.

Knowing your LTV allows you to make informed decisions about how much you can afford to spend on acquiring new customers (Customer Acquisition Cost, or CAC). A healthy SaaS business typically aims for an LTV to CAC ratio of 3:1 or higher.

The Inputs Explained

This calculator uses the standard "simple" LTV formula suited for most SaaS models with relatively stable metrics:

• Average Revenue Per User (ARPU): The average amount of monthly revenue generated per active customer account. If you have tiered pricing, this is the weighted average across all tiers.
• Monthly Churn Rate (%): The percentage of your customers who cancel their subscription in a given month. This is the inverse of retention. A lower churn rate drastically increases LTV.
• Gross Margin (%): The percentage of revenue kept after subtracting the direct costs associated with serving the customer (e.g., hosting costs, third-party license fees directly tied to usage, customer support salaries). For many SaaS companies, this is typically between 70% and 90%.

How to Use This Calculator

Enter your current metrics into the fields above. Ensure your churn rate is entered as a monthly percentage (e.g., if you lose 5% of customers per month, enter "5"). Click "Calculate LTV" to see the projected lifespan of a customer and their total value to your business.

Example Scenario

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

• They charge an average of $75.00 per month per customer (ARPU).
• They experience a monthly customer churn rate of 4%.
• Their gross margins are high, sitting at 85%.

Using the calculator above, we find:

1. Estimated Lifetime: The average customer stays for 25 months (1 / 0.04).
2. LTV: The total value of that customer is $1,593.75 ($75 * 0.85 / 0.04).

This means this company could theoretically spend up to roughly $530 (one-third of the LTV) to acquire a new customer and still maintain a healthy business model.