SaaS LTV Calculator 2026 Customer Lifetime Value

Calculate customer lifetime value with an interactive sensitivity analysis showing how small changes in churn rate dramatically shift LTV. The aha moment that makes people bookmark this page.

Customer Lifetime Value
$10.0K

LTV = ARPU x Gross Margin / Monthly Churn Rate

= $400 x 75% / 3% = $10.0K

Average Customer Lifetime
33.3 months
2.8 years

LTV Sensitivity Analysis

See how small changes in churn rate dramatically shift LTV. A 0.5% improvement in monthly churn can be worth thousands per customer.

Monthly ChurnLifetime (months)LTVvs. Your Rate
0.5%200.0$60.0K+$50.0K
1%100.0$30.0K+$20.0K
1.5%66.7$20.0K+$10.0K
2%50.0$15.0K+$5.0K
2.5%40.0$12.0K+$2.0K
3% (yours)33.3$10.0KCurrent
4%25.0$7.5K$-2500
5%20.0$6.0K$-4000
7%14.3$4.3K$-5714
10%10.0$3.0K$-7000

Simple vs Cohort-Based LTV

The simple formula (ARPU x Margin / Churn) works well when your churn rate is relatively stable and your ARPU does not change much over the customer lifetime. For most pre-Series B companies with straightforward subscription pricing, this is sufficient.

Cohort-based LTV tracks actual revenue from a group of customers acquired in the same period (e.g., all January 2025 sign-ups) over time. Month by month, you observe how much revenue that cohort generates. After 12-24 months of data, you can model the revenue curve and extrapolate total lifetime value. This approach captures non-linear patterns: high early churn that flattens, expansion revenue that accelerates, seasonal effects.

When to switch: once you have 18+ months of cohort data and either significant expansion revenue (NRR above 110%) or observable churn curve flattening, cohort-based LTV will give materially different (usually higher) results than the simple formula.

Common LTV Calculation Mistakes

Using revenue instead of gross profit

LTV should use ARPU x Gross Margin, not raw ARPU. A customer paying $500/month with 60% margin generates less lifetime value than one paying $400/month with 80% margin.

Ignoring churn curve shape

Most SaaS products see higher churn in months 1-3 that then flattens. Using the average monthly churn rate understates LTV for mature cohorts and overstates it for newer ones.

Not accounting for expansion

If you have strong NRR (> 110%), the simple formula underestimates LTV because it ignores the revenue growth from existing customers. Cohort analysis captures this.

Calculating too early

You need at least 6 months of retention data before the simple formula is meaningful, and 18+ months before cohort analysis adds value. Early-stage LTV calculations are estimates, not facts.

Related Calculators

LTV:CAC RatioChurn RateCAC CalculatorGross Margin

Frequently Asked Questions

How do you calculate LTV for SaaS?
The simple formula is LTV = ARPU x Gross Margin / Monthly Churn Rate. For example, if your monthly ARPU is $400, gross margin is 75%, and monthly churn is 3%, then LTV = $400 x 0.75 / 0.03 = $10,000. This formula assumes constant churn rate and ARPU, which works for most early-stage companies. When you have significant expansion revenue or non-linear churn curves, cohort-based LTV analysis gives more accurate results.
Why use gross margin in LTV calculation?
LTV should reflect the actual profit a customer generates, not just revenue. If your ARPU is $400/month but it costs $100/month in hosting and support to serve that customer (75% gross margin), the economic value is $300/month. Using revenue instead of gross profit overstates LTV and leads to poor investment decisions. Fully-loaded LTV (using gross margin) gives a realistic picture of what each customer is worth.
When does the simple LTV formula break down?
The simple formula assumes constant churn and constant ARPU. It breaks down in three scenarios: (1) Significant expansion revenue, where customers grow their spend over time. (2) Non-linear churn curves, where churn is high in early months but drops after customers pass a retention inflection point. (3) Cohort effects, where different customer segments or acquisition channels have fundamentally different retention profiles. In these cases, cohort-based analysis that tracks actual revenue per cohort over time is more accurate.
What is a good LTV:CAC ratio?
The widely cited benchmark is 3:1 minimum, meaning LTV should be at least 3x your customer acquisition cost. A ratio of 3-5x is considered healthy. Above 5x is excellent but may indicate underinvestment in growth. Below 3x means you are spending too much to acquire customers relative to their value, or your retention needs improvement. See our dedicated LTV:CAC ratio calculator for detailed diagnostics.