Customer Lifetime Value (LTV) Calculator for SaaS
Calculate true gross-margin-adjusted Customer Lifetime Value (LTV) and average customer lifespan in months. Free interactive SaaS growth calculator.
Calculated Results
Margin-Adjusted LTV
$1000.00
Avg Customer Lifespan
25 Months
LTV = (ARPU × Gross Margin%) / Churn%About this tool
Customer Lifetime Value (LTV)—sometimes called Customer Lifetime Value (CLV)—measures the total net gross profit an individual customer account generates for your SaaS business throughout their entire lifecycle. Many founders make the dangerous mistake of calculating LTV simply as ARPU divided by churn, completely ignoring Cost of Goods Sold (COGS) such as hosting infrastructure, third-party API tokens, customer support, and payment gateway fees. True SaaS LTV must be adjusted for gross margin: an account paying $100/mo with an 80% gross margin generates $80 of contribution margin per month, not $100. Calculating margin-adjusted LTV determines the absolute ceiling on what your business can spend on customer acquisition (CAC) while remaining economically viable. Use this calculator to compute your true customer lifetime value.
How It Works
- 1Input your monthly Average Revenue Per User (ARPU).
- 2Input your gross margin percentage (e.g. 80% after hosting and support expenses).
- 3Input your monthly customer churn rate percentage.
- 4Review your calculated LTV, average customer lifespan in months, and cumulative contribution margin.
Formula & Math
Transparent LogicLTV = (Monthly ARPU × (Gross Margin% / 100)) / (Monthly Churn% / 100)
Worked Practical Example
A project tool charges $50/mo ARPU with an 80% gross margin and experiences 4% monthly customer churn.
Calculation / Steps
LTV = ($50 × 0.80) / 0.04 = $40 / 0.04 = $1,000. Customer Lifespan = 1 / 0.04 = 25 months.
Expected Result
$1,000 Customer Lifetime Value ($40/mo gross profit over 25 average months).
Frequently Asked Questions
Why must gross margin be included in SaaS LTV?+
If you don't deduct COGS, your LTV represents top-line revenue rather than gross profit, causing you to overspend on acquisition and lose money on every user.
How does reducing monthly churn by 1% affect LTV?+
Because LTV is roughly monthly contribution margin divided by monthly churn, small churn changes have large effects. With $40 of monthly contribution margin, cutting churn from 4% to 3% moves LTV from $1,000 to about $1,333.
What is an ideal LTV for early-stage B2B SaaS?+
LTV only means something next to what it costs to win a customer. Compare it with your CAC in the LTV:CAC calculator, and check how many months it takes to earn the acquisition cost back.
Automate retention on your cancel button
BoolBul directly expands your LTV by lowering the churn denominator, multiplying customer lifespan without increasing acquisition costs.
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