Estimate customer lifetime value and acquisition efficiency in seconds. Ideal for SaaS teams tracking profitability and optimizing ROI with clear LTV and LTV/CAC ratio insights.
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This tool calculates the Lifetime Value (LTV) of a customer based on average revenue, gross margin, and churn rate and optionally shows your LTV to CAC ratio to assess marketing efficiency.
LTV (Lifetime Value) estimates how much revenue a customer brings to your business before they churn. It helps you understand long-term profitability and how much you can afford to spend on acquiring new customers.
ARPA stands for Average Revenue Per Account it’s your Monthly Recurring Revenue (MRR) divided by the total number of active customers.
Formula: ARPA = MRR / Total Customers
Gross margin is the percentage of revenue left after subtracting the cost of delivering your service. For most SaaS companies, it’s typically between 70–90%.
Churn rate is the percentage of customers who cancel each month.
Formula: Churn Rate = (Customers Lost ÷ Total Customers) × 100
If you don’t enter your Customer Acquisition Cost (CAC), the calculator will still give you the LTV, but the LTV to CAC ratio will not be shown.
A healthy SaaS business typically has an LTV:CAC ratio of 3:1 or higher, meaning you earn three times what you spend to acquire each customer.
A low LTV is usually caused by high churn or low ARPA. To improve it, focus on increasing customer retention and raising pricing or expansion revenue.
Yes just adjust your ARPA input to reflect average monthly revenue, even if some customers are billed annually. The model is built around monthly revenue logic.
It works best for revenue-generating customers. For freemium models, consider segmenting paid users only or adjusting inputs to reflect blended ARPA across free and paid cohorts.
