# SaaS LTV Calculator (Customer Lifetime Value)

URL: https://speedycalculator.com/calculators/finance/saas-ltv/
Last updated: 2026-10-25

> The SaaS LTV calculator estimates the lifetime value of a subscription customer from average revenue per account, gross margin, monthly churn and expansion revenue – the core unit-economics figure for software companies.

## Inputs

- I know
- ARPA (average revenue per account per month)
- Monthly recurring revenue (MRR)
- Number of customers
- Gross margin (%)
- Monthly churn (%)
- Account expansion per month

## Results

- ARPA used
- Average customer lifetime
- Customer lifetime value (LTV)
- LTV without expansion

## Formula

```
LTV = ARPA × gross margin ÷ churn
With expansion: LTV = ARPA × GM ÷ churn + expansion × GM ÷ churn²
ARPA = MRR ÷ customers
```

## Explanation

In subscription businesses, customers pay every month until they cancel, so the expected lifetime is 1 ÷ churn. Expansion revenue (upsells and price rises) raises LTV sharply – which is why net revenue retention is watched so closely.

### How to use the SaaS LTV Calculator

- **I know**
- **ARPA (average revenue per account per month)**
- **Monthly recurring revenue (MRR)**
- **Number of customers**
- **Gross margin**
- **Monthly churn**
- **Account expansion per month**

Results update as you type, and every field accepts the units shown in its menu.

### How it works

Enter the average revenue per account (or MRR and customers), gross margin, monthly churn and monthly expansion per account.

### Tips

- Use figures for the same period (a month, a quarter or a year) for every input so ratios compare like with like.
- Track the metric over time – the trend usually tells you more than a single value.
- Compare your result with industry benchmarks, which vary a lot between sectors.
- Treat the result as a starting point for a decision, then check the assumptions behind each input.

### Common mistakes to avoid

- Mixing monthly and yearly numbers in the same calculation.
- Using revenue where the formula needs profit (or the other way round).
- Forgetting hidden costs such as taxes, fees, overheads or your own time.

### Inputs explained

FieldWhat to enterI knowChoose one: ARPA, MRR and number of customersARPA (average revenue per account per month)Amount in your currencyMonthly recurring revenue (MRR)Amount in your currencyNumber of customersA numberGross marginIn %Monthly churnIn %Account expansion per monthAmount in your currency

### What each result means

- **Average customer lifetime** = 100÷[Monthly churn]
- **Customer lifetime value (LTV)** = [ARPA used]×[Gross margin]÷100÷([Monthly churn]÷100) + [Account expansion per month]×[Gross margin]÷100÷([Monthly churn]÷100)^2
- **LTV without expansion** = [ARPA used]×[Gross margin]÷100÷([Monthly churn]÷100)

### Example values

How the main result changes when **ARPA** changes and everything else stays at the example values above:

ARPA (average revenue per account per month)Customer lifetime value (LTV)603,840904,8001205,7601506,7201807,6802409,600

## Worked example

Inputs — I know: ARPA; ARPA (average revenue per account per month): $120; Monthly recurring revenue (MRR): $240,000; Number of customers: 2,000; Gross margin: 80 %; Monthly churn: 2.5 %; Account expansion per month: $1.5.

Results — ARPA used = $120.00; Average customer lifetime = 40 months; **Customer lifetime value (LTV) = $5,760.00**; LTV without expansion = $3,840.00.

## FAQ

**What is a good LTV for SaaS?**
At least three times the customer acquisition cost.

**Why does churn matter so much?**
Halving churn doubles the expected lifetime and so roughly doubles LTV.

**Should I use revenue or gross margin?**
Gross margin – it reflects the profit that pays back acquisition costs.

**What formula does the SaaS LTV Calculator use?**
LTV = ARPA × gross margin ÷ churn.