SaaS LTV Calculator
Customer lifetime value with gross margin, expansion and a discount rate, next to the simple ARPU ÷ churn formula, so the number survives investor scrutiny.
Updated · By Niraj Kumar · 3 sources
https://checkpre.com/finance/saas-ltv-calculator
Revenue and customers
ARPU $100 a month.
Retention
Customers who cancel each month. 2% a month is 22% a year.
Upgrades and added seats less downgrades, from customers who stay. Gives NRR of 92%.
Margin and acquisition
Revenue left after hosting, support, payment fees and third-party APIs.
Ads, tools and the pay of sales and marketing staff. CAC $733.
Cash
R&D, G&A, rent: everything outside cost of revenue and sales and marketing.
LTV settings
What future profit is worth today. 0 for an undiscounted LTV.
How long a customer's profit counts. 60 is common.
- CAC
- $733
- $22,000 ÷ 30 new customers
- LTV:CAC
- 4.2:1
- Healthy, at or above 3:1
- CAC payback
- 9.4 months
- Under 12 months: efficient
- Net revenue retention
- 92%
- Gross retention 78%; 22% of customers lost a year
- Implied valuation
- $2,457,000
- 3.4× ARR on 49% growth; Rule of 40: 16
- Cash runway
- Default alive
- Burning $20,200 a month; profitable in month 11, before the cash runs out
| Change | LTV | LTV:CAC | Payback | Valuation | Break-even |
|---|---|---|---|---|---|
| As entered | $3,091 | 4.2:1 | 9.4 months | $2,457,000 | Month 11 |
| Cut monthly churn by 1 point | +$953 | +1.30 | – | +$1,053,000 | −2 mo |
| Add 0.5 points of monthly expansion | +$417 | +0.57 | – | – | −1 mo |
| Acquire customers 10% cheaper | – | +0.47 | −0.9 mo | – | −1 mo |
| Raise gross margin by 5 points | +$198 | +0.27 | −0.6 mo | +$63,000 | −2 mo |
Expected profit from a new customer, allowing for the chance they churn and for expansion. Simple payback ignores churn: 9.4 months.
Burning $20,200 a month; profitable in month 11, before the cash runs out. New customers join at today's ARPU; costs stay flat.
| Metric | Yours | Median | Strong | Where you sit |
|---|---|---|---|---|
| Monthly churn | 2% | 2% | 1% | Above median |
| Net revenue retention | 92% | 92% | 102% | Above median |
| Gross margin | 78% | 75% | 82% | Above median |
| CAC payback | 9.4 months | 12.0 months | 8.0 months | Above median |
How is SaaS LTV calculated?
Simple LTV is ARPU × gross margin ÷ monthly churn: $100 × 78% ÷ 2% = $3,900. A sounder figure adds expansion, discounts future profit and caps the horizon: $3,091 over 60 months at 10% a year.
ARPU = MRR ÷ customers; gross profit per customer g = ARPU × gross margin;
annual churn = 1 − (1 − c)^12; NRR = ((1 − c) × (1 + e))^12; GRR = (1 − c)^12;
simple LTV = g ÷ c; LTV = Σ g × q^t for t = 0 … H − 1, q = (1 − c)(1 + e) ÷ (1 + d)^(1/12);
CAC = sales and marketing ÷ new customers; payback = CAC ÷ g; LTV:CAC = LTV ÷ CAC;
cash(t+1) = cash(t) + MRR(t) × margin − sales and marketing − other costs; runway = months until cash < 0This page uses the same method as the SaaS Unit Economics Calculator, which explains each term and assumption in full.
Worked example
An SMB SaaS on $60,000 MRR from 600 customers at $100 a month, adding 30 a month on $22,000 of sales and marketing, with 2% monthly churn, 1.3% monthly expansion, 78% gross margin, $45,000 of other monthly costs and $600,000 in the bank.
- 1Gross profit per customer: $100 × 78% = $78 a month
- 2Simple LTV: $78 ÷ 2% = $3,900
- 3Each month a customer is 98% likely to stay and grows 1.3%; profit is discounted 10% a year
- 4Summed over 60 months: $3,091
LTV $3,091, against a simple LTV of $3,900.
Frequently asked questions
Should LTV use revenue or gross margin?
Gross margin. A customer paying $100 a month that costs $25 to host and support is worth $75 a month to you, and that is what CAC has to be paid back from. Revenue LTV overstates value by the cost of revenue and makes LTV:CAC look 20 to 30% better than it is.
Why discount LTV?
Because profit in year five is worth less than profit today: it is uncertain and money has a cost. A 10% annual discount rate is a common default for venture-backed companies; use your cost of capital if you know it. Discounting matters most when churn is low and customers stay for years.
Sources
Related calculators
- SaaS Unit Economics CalculatorChurn, LTV, CAC, payback, NRR and runway from one set of inputs: change churn by a point and watch every metric, the valuation and your cash runway move.
- LTV:CAC Ratio CalculatorLifetime value against acquisition cost, rated against the 3:1 rule, with the four levers that move it most and what each is worth.
- SaaS Churn Rate CalculatorConvert monthly churn to annual, see average customer lifetime and gross retention, and what each point of churn costs in LTV and runway.
- Net Revenue Retention (NRR) CalculatorNet and gross revenue retention from churn and expansion, and how NRR flows through to LTV, growth and the ARR multiple.