5 min read

LTV Calculator for SaaS

Calculate Customer Lifetime Value using four proven methods. See formulas, instant results, and guidance on which method to use.

Interactive LTV Calculator

Formula

LTV=

ARPAChurn Rate

Best for: Quick estimates, early-stage companies, initial planning. Accuracy: ±30%.

Average Revenue Per Account (Monthly)

Monthly Churn Rate

Customer Lifetime Value

$2,000

Calculation: $100 ÷ 0.05 = $2,000

Average customer lifetime: ~20 months

When to use: Early-stage businesses without historical data, quick directional estimates, or when you need a fast benchmark. This method assumes constant pricing and doesn't account for delivery costs.

Method	Result	Best For
Simple	$2,000	Quick estimates
Advanced	$1,600	Financial planning
Cohort	$1,560	Historical accuracy
Predictive	$1,800	Strategic decisions

Four Ways to Calculate LTV

Simple Method: ARPA ÷ Churn Rate. Fast directional estimate, ±30% accuracy. Use for early-stage planning.

Advanced Method: (ARPA × Margin) ÷ Churn. Accounts for delivery costs, ±20% accuracy. Industry standard for SaaS.

Cohort Method: Total Revenue ÷ Cohort Size. Uses actual historical data, ±5% accuracy. Most precise.

Predictive Method: ARPA × Average Lifetime. Intuitive approach, ±15-25% accuracy. Good for CAC targeting.

For detailed information on LTV calculation methods, industry benchmarks by segment, and how to use this metric for paid acquisition optimization, read our comprehensive What is LTV in SaaS guide.

Understanding LTV is essential for optimizing your SaaS unit economics. Once you know your LTV, you can determine sustainable Customer Acquisition Cost (CAC) targets and evaluate your Return on Ad Spend (ROAS).

If you're running paid advertising, consider implementing server-side tracking to send actual LTV data back to Google Ads, Meta, and TikTok. This is especially critical for SaaS companies running Google Ads, where Smart Bidding needs LTV signals to optimize correctly. Learn how it works.