SaaS Lifetime Value

Finance

Calculate SaaS Lifetime Value. Formula: LTV = (ARPU × GM%) / Monthly Churn. Predicts customer revenue value.

Formula

LTV = (ARPU × GM%) ÷ (Monthly Churn / 100)

$500 ARPU, 75% margin, 5% churn

Inputs
  • Monthly ARPU ($): 500
  • Gross Margin (%): 75
  • Monthly Churn Rate (%): 5

LTV ≈ $7,500

Frequently asked questions

What is a good LTV?
SaaS LTV > $1000 is healthy; aim for LTV:CAC ratio > 3:1.