Bear / Base / Bull Scenarios
Bear: churn +50%, ARPU −10% | Base: current inputs | Bull: churn −30%, ARPU +10%
Sensitivity Matrix — ARPU × Monthly Churn → LTV
Rows = ARPU (50% to 150% of current) | Columns = Monthly Churn Rate (50% to 150% of current) | Current cell outlined in blue
SaaS Industry Benchmarks by Stage
| Stage | Typical LTV | LTV:CAC Target | Monthly Churn | Annual Churn | Gross Margin |
| Pre-Seed / Idea | $200 – $800 | > 1:1 | 5 – 15% | 46 – 86% | 50 – 65% |
| Seed Stage | $500 – $2,000 | ≥ 1.5:1 | 3 – 7% | 30 – 57% | 60 – 70% |
| Series A | $1,500 – $5,000 | ≥ 3:1 | 1.5 – 4% | 17 – 39% | 65 – 75% |
| Series B / Growth | $4,000 – $12,000 | ≥ 4:1 | 0.5 – 2% | 6 – 21% | 72 – 82% |
| Mature / Public | $8,000 – $50,000+ | ≥ 5:1 | 0.2 – 1% | 2 – 11% | 75 – 90% |
Your LTV vs. Industry Benchmarks
Goal Seeker: What Churn Rate Do You Need?
Enter your target LTV:CAC ratio to find the required monthly churn rate given your current ARPU, gross margin, and CAC.
Enter your target ratio and click Calculate to see what churn rate you need.
LTV:CAC Ratio Quick Reference
| LTV:CAC Ratio | Status | What It Means | Recommended Action |
| < 1:1 | At Risk | Losing money on each customer | Immediately reduce churn or CAC |
| 1:1 – 2:1 | Marginal | Very thin margin on acquisition | Optimize churn, ARPU, or margins |
| 2:1 – 3:1 | Acceptable | Approaching healthy territory | Focus on expanding revenue |
| 3:1 – 5:1 | Healthy | Industry benchmark sweet spot | Invest confidently in growth |
| > 5:1 | Excellent | May be under-investing in growth | Consider increasing acquisition spend |
How to Use This Calculator
1
Enter ARPU
Input the average monthly revenue per account, including base subscription and any add-on revenue.
2
Set Churn & Margin
Enter your monthly customer churn rate and gross margin percentage.
3
Calculate SaaS LTV
See the customer lifetime value, expected lifespan, LTV:CAC ratio, and sensitivity across churn scenarios.
Key Terms
- SaaS LTV
- Total expected gross profit from a customer over their entire subscription lifetime.
- ARPU
- Average Revenue Per User (or Account) — typically measured monthly for SaaS businesses.
- Gross Margin
- Revenue minus direct costs (hosting, support, onboarding) as a percentage of revenue.
- Customer Lifespan
- The average duration a customer remains a paying subscriber before churning.
- Expansion Revenue
- Additional revenue from existing customers through upgrades, add-ons, or increased usage.
Real-World Examples
Example 1
SMB SaaS
ARPU: $79/mo, Gross Margin: 82%, Monthly Churn: 4.0%
LTV: ($79 × 0.82) / 0.04 = $1,620. Lifespan: 25 months.
Example 2
Enterprise SaaS
ARPU: $4,200/mo, Gross Margin: 75%, Monthly Churn: 0.8%, Expansion: 1.5%/mo
LTV with expansion: ($4,200 × 0.75 × 1.015) / (0.008) = $399,516. Net negative churn.
SaaS LTV by Churn Rate ($100/mo ARPU, 80% Margin)
| Monthly Churn | Lifespan | LTV | LTV:CAC (at $500 CAC) |
|---|
| 1% | 100 months | $8,000 | 16:1 |
| 2% | 50 months | $4,000 | 8:1 |
| 3% | 33 months | $2,667 | 5.3:1 |
| 5% | 20 months | $1,600 | 3.2:1 |
| 8% | 12.5 months | $1,000 | 2:1 |
Calculating SaaS Customer Lifetime Value
LTV Drives Every Decision
LTV determines how much you can afford to spend on acquisition (CAC), which customer segments to target, and where to invest in product development. A segment with $8,000 LTV can justify a $2,000 CAC with inside sales, while a $500 LTV segment needs self-serve acquisition at under $150 CAC. Segment-level LTV analysis often reveals that 20% of customer types drive 80% of total lifetime value.
The Power of Expansion Revenue
With a monthly expansion rate exceeding churn, LTV becomes theoretically infinite (in practice, limited by market size). This is net negative revenue churn — the holy grail of SaaS. Usage-based pricing, tiered seats, and add-on products create natural expansion. Companies like Snowflake and Twilio achieve 130-170% NRR, meaning each cohort's revenue grows 30-70% annually without any new customer acquisition.