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SaaS Churn & LTV Calculator

Calculate your retention health and Customer Lifetime Value (LTV).

Starting Customers Total customers at the start of the period.

Customers Lost Customers who canceled during the period.

Avg. Monthly Revenue (ARPU) ($) Average monthly revenue per customer.

Gross Margin (%) Percentage of revenue after COGS.

How to Calculate SaaS Churn and Lifetime Value

For any subscription-based business, understanding your Churn Rate and Customer Lifetime Value (LTV) is critical for long-term sustainability. These metrics tell you how fast you are losing customers and how much each customer is worth to your bottom line.

1. Customer Churn Rate Formula

Churn Rate is the percentage of customers who stop using your service during a specific timeframe. The basic formula is:

                Churn Rate = (Lost Customers / Total Customers at Start) × 100
            

2. Customer Lifetime (Months)

This metric estimates how long a customer stays with your company before churning. It is calculated by taking the inverse of the churn rate:

                Customer Lifetime = 1 / Churn Rate
            

3. Customer Lifetime Value (LTV)

LTV represents the total gross profit you expect to earn from a customer over the duration of their relationship with your business. The formula we use incorporates your profit margin to give a realistic view of value:

                LTV = (Avg. Monthly Revenue × Gross Margin %) / Churn Rate
            

Practical Example

Imagine you run a SaaS tool with 1,000 users. Last month, you lost 20 users. Your ARPU (Average Revenue Per User) is $100, and your gross margin is 85%.

Churn Rate: (20 / 1000) = 2.0%
Lifetime: 1 / 0.02 = 50 Months
LTV: ($100 × 0.85) / 0.02 = $4,250

This means every new customer you acquire is worth approximately $4,250 in profit. You can use this figure to determine your maximum Customer Acquisition Cost (CAC).