SaaS LTV Calculator

Your numbers

Drag to model different improvement scenarios.

Current LTV

LTV is the total revenue you expect from a customer over their lifetime. Dividing ARPU by monthly churn gives the average number of months a customer stays, multiplied by their monthly spend.

If 5% of customers cancel each month, the average customer stays for 20 months (1 ÷ 0.05). This is the expected lifespan in months — the foundation of every LTV calculation.

The ratio of lifetime value to what you spent acquiring each customer. A ratio of 3:1 or higher is the standard benchmark for a healthy SaaS business. Below 3:1 typically means you're spending too much to acquire customers relative to what they're worth.

Reducing churn extends customer lifespan, which extends revenue duration. A 25% churn reduction increases LTV by 33%. A 50% reduction doubles it. The relationship is non-linear — small churn improvements compound into large LTV gains.

What is a good LTV for SaaS?

LTV on its own isn't meaningful without context — it depends entirely on ARPU and churn. What matters is the LTV:CAC ratio. A ratio of 3:1 is the widely cited benchmark: for every £1 spent acquiring a customer, you should expect to earn £3 back. Below 3:1, your unit economics are under stress. Above 5:1 often means you're underinvesting in growth.

Why does halving churn double LTV?

Because LTV = ARPU ÷ churn rate. If you halve the denominator, the result doubles. A customer who churns at 5%/month has an expected lifespan of 20 months. At 2.5%, that extends to 40 months. Every month of additional retention is another month of full ARPU — with no acquisition cost.

Is this the same as LCV (lifetime customer value)?

LTV and LCV are used interchangeably. Some definitions apply a gross margin adjustment — multiplying LTV by your gross margin percentage to get the profit contribution rather than revenue. This calculator uses revenue-based LTV for simplicity.

Does LTV account for expansion revenue?

No — this calculator uses a flat ARPU. In practice, if customers upgrade over time (net negative revenue churn), LTV will be higher than calculated here. The figure here is a conservative baseline.

How do I actually reduce my churn rate?

The most reliable starting point is understanding why customers are leaving. Without that, any intervention is a guess. Once you know the top cancellation reasons, you can prioritise fixes: improve onboarding for customers who leave within 60 days, revisit pricing for price-sensitive segments, or build out features that keep getting cited as missing. Dropcause automates the collection of cancellation reasons on every Stripe cancellation.