SaaS Metrics Calculator – LTV, CAC, Churn and ARR
Churn is the share of customers who cancel each month. A 3% monthly churn means an average customer stays about 33 months.
What these SaaS metrics tell you
For a subscription business, a few numbers show whether growth is healthy. Customer lifetime value (LTV) is the profit you expect from an average customer. Customer acquisition cost (CAC) is what it costs to win one. Compare them and you can see whether each new customer pays for itself, and how fast.
Formulas
LTV = monthly revenue per customer × gross margin ÷ monthly churn.
LTV to CAC ratio = LTV ÷ CAC. CAC payback (months) = CAC ÷ (monthly revenue per customer × gross margin).
Customer lifetime (months) = 1 ÷ monthly churn. MRR = customers × monthly revenue per customer. ARR = MRR × 12.
Worked example
Customers pay ₹2,000 a month, gross margin is 80%, monthly churn is 3% and it costs ₹12,000 to win a customer. You have 150 customers.
Monthly profit per customer is ₹1,600, so LTV = 1,600 ÷ 0.03 = ₹53,333. The LTV to CAC ratio is 4.44 : 1, and CAC payback is 7.5 months. An average customer stays about 33.3 months. MRR is ₹3,00,000 and ARR is ₹36,00,000.
Frequently asked questions
What is a good LTV to CAC ratio?
A common rule of thumb is 3 : 1 or better. Much lower means you may be overpaying for customers. Much higher can mean you are under-investing in growth. It is a guide, not a law.
What is a good CAC payback period?
Many subscription businesses aim for under 12 months, and faster is safer if cash is tight. The right number depends on your funding and how long customers stay.
Should I use revenue churn or customer churn?
This tool uses customer (logo) churn. If your customers upgrade and downgrade a lot, revenue churn tells a fuller story, so check both.
Why does a small drop in churn change LTV so much?
LTV divides by churn, so going from 3% to 2% lifts the customer lifetime from 33 to 50 months. Retention is usually the cheapest way to raise LTV.
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No. Everything is calculated in your browser.
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Results are estimates for information only and are not financial, tax or legal advice.