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SaaS Churn, ARR & Lifetime Value (LTV) Calculator Finance
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SaaS Churn, ARR & Lifetime Value (LTV) Calculator

Calculate customer lifetime value (LTV), annual recurring revenue (ARR), customer lifespan, cohort half-life, and LTV:CAC health ratios from MRR, ARPU, and churn.

SaaS Recurring Revenue & Churn Inputs

Total recurring revenue per month ($).
Average monthly subscription per account ($).
% of customers cancelling each month.
COGS margin (hosting, support, APIs).
Blended sales & marketing spend per acquired customer ($).
Customer Lifetime Value (LTV)
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Annual Recurring Revenue (ARR)
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LTV-to-CAC Ratio
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Average Customer Lifespan
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Cohort Retention Half-Life
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Annualized Compound Churn
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Implied % of customer base lost over 12 months without new additions.

How SaaS Churn, ARR, and Customer Lifetime Value (LTV) Work

Subscription businesses rely on compounding recurring revenue. A high customer acquisition rate cannot sustain growth if customer churn creates an accelerating revenue leak. Measuring Customer Lifetime Value (LTV) adjusted for Gross Margin provides the true economic value of each acquired user.

Core Mathematical Formulas

  • ARR (Annual Recurring Revenue): ARR = MRR × 12
  • Customer Lifespan: Lifespan (months) = 1 / (Monthly Churn / 100)
  • Gross-Margin Adjusted LTV: LTV = (ARPU × (Gross Margin / 100)) / (Monthly Churn / 100)
  • Annual Compound Churn: Annual Churn = 1 - (1 - Monthly Churn)^12
  • Cohort Half-Life: Half-life = ln(0.5) / ln(1 - Monthly Churn)

LTV-to-CAC Health Benchmarks

The ratio of Customer Lifetime Value to Customer Acquisition Cost indicates unit economic viability:

  • > 3.0x: Healthy, profitable unit economics suitable for scaling acquisition.
  • 1.0x to 3.0x: Marginal profitability; requires improving churn retention or optimizing ad spend.
  • < 1.0x: Value destruction; every customer acquired costs more than they will ever return.

Frequently Asked Questions

Why must LTV be adjusted for Gross Margin?

Calculating LTV from pure top-line revenue ignores hosting infrastructure, third-party API costs, and customer support overhead required to deliver the service. Gross-margin adjusted LTV represents actual gross profit contribution.

What is the difference between customer churn and revenue churn?

Customer churn measures the percentage of accounts lost. Revenue churn (or Net Revenue Retention) factors in expansion revenue, upsells, and downgrades from existing accounts. Net negative revenue churn occurs when upsells exceed cancellations.

What is a good monthly churn rate for B2B SaaS?

For enterprise B2B SaaS, monthly churn is typically below 1% (10% annually). For mid-market B2B, 1%–2% is standard. For prosumer or SMB SaaS, 3%–5% is common due to higher small business mortality.