SaaS LTV calculator. What a customer is worth over time.

A SaaS LTV calculator works out customer lifetime value, the total margin-adjusted revenue you can expect from a customer across their whole relationship with you. It takes your average revenue per account, multiplies by gross margin and divides by monthly churn. The result is the ceiling on what you can sensibly spend to acquire a customer, which is why LTV underpins almost every other SaaS growth decision.

Multiply average revenue per account by gross margin, then divide by your monthly churn rate. Using gross margin rather than raw revenue matters, because it reflects the profit a customer actually generates after the cost of serving them. The churn rate in the denominator is the most sensitive input: small reductions in churn produce large increases in LTV, which is why retention is such a powerful lever.

Because revenue overstates what a customer is worth. A customer paying $500 a month at 80% gross margin generates $400 of gross profit a month, not $500. LTV based on revenue inflates the number and leads you to overspend on acquisition. The margin-adjusted formula gives you the true economic value, which is the figure you should compare against CAC.

Roughly 3 to 1 is the common healthy target: a customer worth three times what they cost to acquire. Below 1 to 1 you lose money on every customer. Much above 5 to 1 can signal underinvestment in growth, meaning you could spend more on acquisition and still grow profitably. The ratio matters more than LTV alone, because it ties customer value directly to acquisition cost.

Dramatically, because churn sits in the denominator of the formula. Halving your monthly churn rate doubles your LTV. A SaaS losing 2% of customers a month has an average customer lifespan of 50 months, while one losing 4% has just 25 months and half the LTV. This is why retention work often delivers a better return than acquisition: it lifts the value of every customer you already have.