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SaaS Lifetime Value Calculator

This SaaS LTV calculator will help you calculate the lifetime value of your customers , and determine how much you can afford to spend on acquisition.

Understanding SaaS LTV Calculator 

What is SaaS LTV? 

SaaS LTV is one of many important SaaS metrics. It stands for the lifetime value of a customer in a software-as-a-service (SaaS) business model. It predicts the net profit attributed to the average customer’s future relationship. LTV is an important metric for SaaS companies because it helps them 

  • Accurately estimate the lifetime value of a single customer.
  • Understand the value of acquiring and retaining a customer. 
  • Make strategic decisions about customer acquisition and retention spending.

SaaS LTV is also known as SaaS customer lifetime value (CLTV). 

What is the SaaS LTV formula? 

The basic SaaS lifetime value formula is more complicated than the average financial metric and looks like this

LTV = (ARPA x Gross margin) / Customer churn rate

ARPA, or average revenue per account, refers to the average monthly revenue generated per user. It’s sometimes also called the average revenue per user or ARPU. Gross Margin is the percentage of revenue remaining after deducting the cost of goods sold (COGS). Finally, Customer Churn Rate, or churn, is the percentage of customers that cancel their subscription or stop using the service over a given period of time, for example, one month.

The SaaS LTV formula estimates the total revenue a customer will generate for a company over their lifetime. But remember, it’s only an estimate. SaaS LTV accuracy depends upon the accuracy of a business’s data. Be sure to consider the business model, sub-industry, and product when evaluating LTV.

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Common SaaS LTV questions

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