Calculate SaaS customer lifetime value from revenue per account, gross margin, and churn. Add expansion and a discount rate, and compare LTV with CAC.
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Customer lifetime value
$4,000
$120 margin a month / 3% churn
LTV to CAC
3.7 : 1
About 3 : 1 or better is a common target.
Average customer lifetime
33 months
1 / monthly churn of 3%
CAC payback
8.9 months
Under 12 months is a common target.
Today it brings 33%. Same number of customers, at today's organic and paid CAC.
Blended CAC
$950
now $1,067
Payback
7.9 months
now 8.9 months
LTV to CAC
4.2 : 1
now 3.7 : 1
Payback is the first month the blue margin bar reaches the grey CAC bar. Churn isn't applied here, so this is one customer who stays.
Blended CAC $1,067
Chung Digital AI
Get a plain-English read of your unit economics: whether growth pays for itself, what drives it, and what to look at next. It reads only the numbers below.
What it reads
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Customer lifetime value (CLV or LTV) is the gross margin you expect to earn from one customer before they cancel. For a subscription business it depends on three numbers: revenue per account, gross margin, and churn.
LTV on its own doesn't say much. Compared with customer acquisition cost, it tells you whether growth pays for itself, which is why this calculator shows the LTV to CAC ratio next to it.
LTV = (ARPA x gross margin) / monthly churn
With your numbers:
($150 x 80%) / 3% = $4,000
The simple formula works for most SaaS businesses. Add expansion and a discount rate when you need more detail.
Monthly revenue per account (ARPA) times gross margin. With annual plans, divide the yearly price by 12 first.
The share of customers who cancel each month. 3% monthly churn means an average customer stays about 33 months.
LTV = monthly margin / monthly churn. Compare it with CAC: about 3 to 1 is a common target.
3:1 is a common rule of thumb: each customer earns about three times what it cost to win them. Below 1:1, every new customer loses money. Between 1:1 and 3:1, growth works but leaves little room for mistakes.
A very high ratio, such as 6:1 or more, can mean you are under-investing in growth: you could spend more to win customers and still stay profitable.
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For SaaS: LTV = (average revenue per account per month x gross margin) / monthly churn rate. For example, $150 x 80% / 3% = $4,000.
Yes. Customer lifetime value (CLV) and lifetime value (LTV) mean the same thing. Some teams also write CLTV.
Gross margin. Revenue-based LTV ignores hosting, support, and other costs of serving the customer, so it overstates what a customer is worth and makes the LTV to CAC ratio look better than it is.
About 3:1 is a common target. Under 1:1 means you lose money on each customer. Well above 5:1 can mean you could invest more in growth.
Directly. Average customer lifetime is 1 / monthly churn, so 2% churn means about 50 months and 4% about 25. Halving churn doubles LTV.
Money earned in three years is worth less than money today. A discount rate shrinks future months so LTV isn't overstated, which matters most when churn is low and customers stay for years.
Yes. We save the numbers you enter for 12 months, with your IP address and approximate location, so we can see how the calculator is used and improve it. They also appear in the page address once you change them, so you can share or bookmark a result. If you use the AI explanation, the numbers are sent to our AI provider to write it. See our privacy policy.