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SaaS LTV Calculator

Calculate Customer Lifetime Value (LTV), LTV to CAC ratio, churn impact, and payback period for SaaS business models.

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Customer lifetime value (LTV)

$3,200.00

Avg customer lifespan: 40.0 months

LTV : CAC ratio

2.67x

Target 3x or higher for healthy SaaS

CAC payback period

15.0 months

$80.00 monthly gross profit per user

LTV vs CAC

LTV$3,200.00
  • Customer lifetime value$3,200.0072.7%
  • Customer acquisition cost$1,200.0027.3%
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What is SaaS customer lifetime value?

Customer lifetime value (LTV) estimates the total gross profit a SaaS company earns from an average customer before they churn. Founders and growth teams use LTV alongside customer acquisition cost (CAC) to judge whether paid growth is sustainable and how long it takes to recover marketing spend.

This calculator uses the classic subscription LTV formula based on average revenue per user (ARPU), gross margin, and monthly churn. Pair it with the SaaS metrics calculator to model MRR and retention, or the CPA calculator to benchmark acquisition efficiency against revenue per conversion.

SaaS LTV formula

For a subscription business with a constant monthly churn rate, lifetime value equals gross profit per month divided by the churn rate:

LTV=ARPU×Gross MarginMonthly Churn Rate\mathrm{LTV} = \frac{\mathrm{ARPU} \times \mathrm{Gross\ Margin}}{\mathrm{Monthly\ Churn\ Rate}}

Average customer lifespan in months is the inverse of churn: Lifespan=1/Churn\mathrm{Lifespan} = 1 / \mathrm{Churn}. The LTV to CAC ratio compares lifetime value against acquisition cost, and CAC payback divides CAC by monthly gross profit per user.

Worked example

Suppose ARPU is $100, gross margin is 80%, monthly churn is 2.5%, and CAC is $1,200.

  1. Monthly gross profit per user: 100×0.80=80100 \times 0.80 = 80.
  2. Customer LTV: 80/0.025=3,20080 / 0.025 = 3{,}200.
  3. LTV : CAC ratio: 3,200/1,200=2.673{,}200 / 1{,}200 = 2.67x.
  4. CAC payback: 1,200/80=151{,}200 / 80 = 15 months.

Many SaaS investors look for an LTV : CAC ratio of 3x or higher and a payback period under 12 to 18 months, though benchmarks vary by market and growth stage. To study retention from a different angle, try the customer retention rate calculator.

How to improve LTV

LTV rises when you increase ARPU through upsells, improve gross margin by reducing delivery cost, or lower churn with better onboarding and product stickiness. Cutting CAC alone does not raise LTV, but it improves the LTV : CAC ratio and shortens payback. Model expansion revenue and churned MRR with the SaaS metrics calculator before you change pricing or packaging.

Frequently asked questions

What is a good LTV to CAC ratio for SaaS?
A common benchmark is 3x or higher, meaning each customer generates at least three times the acquisition cost in gross profit. Early-stage companies may accept lower ratios while proving product-market fit, but sustained ratios below 1x mean you lose money on every new customer.
Should I use gross margin or revenue for LTV?
Use gross margin because LTV measures profit contribution, not top-line revenue. A $100 ARPU customer at 80% margin contributes $80 per month toward fixed costs and acquisition payback.
How does monthly churn affect LTV?
LTV is inversely related to churn. Halving churn roughly doubles LTV at the same ARPU and margin. Even small churn improvements compound because customers stay longer and generate more gross profit.
What is CAC payback period?
CAC payback is how many months of gross profit per customer are needed to recover acquisition cost. It equals CAC divided by monthly gross profit per user. Shorter payback frees cash for faster reinvestment in growth.
Does this calculator store my data?
No. All math runs in your browser. Changing inputs updates the page URL so you can copy and share a scenario without sending data to a server.

Resources and references

The formulas and methods in this calculator were checked against these independent sources.