SaaS Lifetime Value Calculator

How to use the SaaS lifetime value calculator

What this calculator does

This calculator estimates the gross-profit lifetime value of one average SaaS account. It combines monthly average revenue per account, gross margin, monthly customer churn, and an optional fixed monthly account-expansion amount. The result is a planning estimate for unit economics, pricing reviews, retention initiatives, and customer-acquisition budgeting. It does not forecast a full cohort, discount future cash flows, model changing churn by customer age, or replace a segmented analysis built from actual customer-level data. Stripe's overview of customer lifetime value and its business uses provides useful context for interpreting the estimate.

When to use it

Use the calculator when comparing acquisition channels, testing the value of a churn-reduction initiative, checking whether a pricing or packaging change could improve account economics, or preparing a simple LTV input for an LTV-to-CAC discussion. It is most useful when your business has enough historical data to estimate a stable monthly churn rate and a defensible gross margin.

How to calculate

1. The calculator opens with a complete demonstration: 25 customers, $6,000 MRR, 65% gross margin, 4% monthly churn, and $0 monthly expansion. The example workbook is ready immediately.
2. Choose Use customers and MRR to derive ARPA, or choose Enter ARPA directly when you already know the monthly account average.
3. Replace the example values. Results update live after every valid change. Review Customer lifetime value, Average revenue per account, Expected customer lifetime, Base value contribution, Expansion contribution, and the calculation breakdown.
4. Select Download Excel to export the current validated inputs and outputs. Select Reset to clear the demonstration and all calculated content. Reset may disable Excel export until a complete valid input set is entered again.

Input guide

ARPA input method is required. Use the customer-and-MRR method when both are known; use direct ARPA when customer count is unavailable or a reporting system already supplies the average. Number of customers is a required positive whole number in derived mode; 25 is a valid example. Do not enter seats when your billing account is the economic customer. Monthly recurring revenue (MRR) is required in derived mode, accepts U.S.-style decimal notation without scientific notation, and must be at least $0.01; $6,000 is the example. Include recurring subscription revenue consistently and exclude one-time setup fees unless your accounting policy intentionally treats them as recurring.

Average revenue per account (ARPA) is required in direct mode and is monthly U.S. dollars per account; $240 is the demonstration equivalent. Higher ARPA raises LTV proportionally, all else equal. Gross margin is a required percentage from 0% through 100%; 65% means $0.65 of each revenue dollar remains after direct costs. Use a margin that reflects hosting, support, payment processing, and other direct service costs under your policy. Stripe's guide to SaaS gross margin explains why consistent cost classification matters.

Monthly customer churn is required and must be greater than 0% and no more than 100%; 4% is the example. Enter a monthly customer or logo churn rate, not annual churn and not revenue churn. Lower churn increases modeled lifetime sharply because expected lifetime is calculated as 1 divided by monthly churn. Monthly account expansion is required, may be zero, and represents a fixed dollar increase in ARPA for each surviving account every month. A $10 entry means the model assumes an account paying $240 in month one pays $250 in month two, $260 in month three, and so on. Do not enter a percentage expansion rate in this dollar field.

Output guide

Customer lifetime value (LTV) is estimated gross profit per average account, shown in dollars. Average revenue per account is either your direct entry or MRR divided by customer count. Expected customer lifetime is 1 divided by the monthly churn fraction, shown in months; it is a mathematical steady-state estimate, not a guaranteed retention period. Base value contribution is ARPA multiplied by expected lifetime and gross margin. Expansion contribution is the gross-margin value attributable to the fixed monthly ARPA increase. A zero expansion contribution is valid when monthly account expansion is zero.

The Calculation breakdown separates pre-margin model value from gross-margin contribution. “Base subscription value” is the revenue-equivalent value from starting ARPA, “Expansion value” is the incremental revenue-equivalent value from account expansion, and “Total LTV” combines both after applying gross margin. High LTV can result from high ARPA, high margin, low churn, or expansion; inspect the drivers rather than treating the headline number as a standalone target.

Worked example

With 25 customers and $6,000 MRR, ARPA is $6,000 ÷ 25 = $240. Monthly churn of 4% implies an expected lifetime of 1 ÷ 0.04 = 25 months. With no monthly expansion, the base gross-profit contribution is $240 × 25 × 65% = $3,900.00. Under the reference model's expansion term, a zero expansion input produces no incremental value, so total LTV is $3,900.00. The demonstration shown here uses the same formula and inputs throughout the page and workbook.