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SaaS LTV Calculator

Customer Lifetime Value (LTV, sometimes CLTV) is the total gross-margin-adjusted revenue you can expect from an average customer over the entire time they stay subscribed. It's the single number that tells you how much you can afford to spend acquiring a customer — pair it with your Customer Acquisition Cost (CAC) and you get the LTV:CAC ratio investors and operators actually watch.

Customer lifetime value

$2,640

Expected customer lifespan

33.3 mo

LTV : CAC ratio

8.8:1

3:1 or higher is the widely-used healthy benchmark — this ratio looks solid. See the ROI calculator for the full acquisition-spend breakdown.

How to calculate SaaS LTV manually

The standard formula is LTV = ARPA × Gross Margin % ÷ Monthly Churn Rate. ARPA (Average Revenue Per Account) is your monthly recurring revenue divided by active customers. Gross margin strips out the cost of actually serving each customer (hosting, support, payment processing) so you're not counting revenue you never actually keep. Churn rate — the share of customers who cancel each month — doubles as a stand-in for average customer lifespan: 1 ÷ churn rate gives you the expected number of months a customer sticks around. Example: $99 ARPA × 80% margin ÷ 3% monthly churn = $99 × 0.8 × 33.3 months ≈ $2,640 LTV.

What's a good SaaS LTV?

LTV only means something next to what it costs to acquire that customer. The widely-used benchmark is an LTV:CAC ratio of at least 3:1 — spend $1 to acquire a customer worth $3 or more over their lifetime. Below 1:1, you're losing money on every customer; above roughly 5:1, you may be under-investing in growth rather than protecting margin. CAC payback periods have stretched in recent years (private SaaS companies now often see 18 months, up from 14), which makes a healthy LTV even more load-bearing as a check on acquisition spend.

How to increase your SaaS LTV

  • Reduce churn first — it has the largest leverage on LTV since it appears as a denominator, not a multiplier. Even a 1-point drop (3% → 2% monthly) increases LTV by 50%.
  • Raise ARPA through upsells, usage-based add-ons, or annual-plan discounts that increase realized revenue per account without new acquisition spend.
  • Improve gross margin by moving support-heavy customers to self-serve, or by optimizing infrastructure costs — every point of margin flows straight into LTV.
  • Target higher-fit customers during acquisition; the customers most likely to churn early are usually the ones acquired off-ICP in the first place.

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Frequently asked

What's the difference between LTV and CLTV?
None — LTV (Lifetime Value) and CLTV (Customer Lifetime Value) refer to the same metric. Some tools use CLTV specifically to distinguish it from other "LTV"-named metrics in ad platforms.
Should I use gross revenue or margin-adjusted revenue for LTV?
Margin-adjusted. Using pure top-line revenue overstates LTV by ignoring what it actually costs to serve a customer, which can make an unprofitable acquisition channel look healthy.
What if my churn rate is 0% or very close to it?
The formula (ARPA × margin ÷ churn) approaches infinity as churn approaches zero, which isn't meaningful — use a realistic annual or cohort-based churn figure instead of an early-stage number that hasn't had time to show real cancellations.
Does LTV account for expansion revenue (upsells)?
Not in this basic formula — it assumes flat ARPA for the customer's lifetime. If upsells are a meaningful share of revenue, a cohort-based LTV model that tracks actual revenue over time will be more accurate than this quick calculation.