Calculate SaaS customer lifetime value, LTV:CAC ratio, CAC payback period, and net revenue retention. Includes cohort survival analysis and churn sensitivity.
Customer Lifetime Value (LTV) is one of the core SaaS unit-economics metrics. It measures the gross-margin revenue you can expect from an average customer over the life of the relationship. Combined with Customer Acquisition Cost (CAC), the LTV:CAC ratio helps you judge whether customer growth is creating value or consuming too much capital.
The standard SaaS LTV formula is deceptively simple — recurring revenue divided by some form of churn rate, multiplied by gross margin — but the nuances matter enormously. Monthly vs annual churn produces wildly different numbers (5% monthly churn = 46% annual churn, not 60%). Expansion revenue from upsells and cross-sells can offset part of the revenue decay, and discounting future cash flows at your cost of capital gives a more realistic present-value LTV.
This calculator models those dynamics with a capped 120-month planning horizon: simple LTV, gross-margin LTV, DCF-adjusted LTV, cohort survival curves, and churn sensitivity analysis. Whether you're an operator optimizing unit economics, an investor evaluating a SaaS business, or a founder stress-testing your pricing model, these metrics help frame the tradeoffs clearly.
SaaS unit economics are highly sensitive to churn, margin, and expansion. This calculator turns those inputs into LTV, payback, and ratio metrics so you can see which operating changes actually move the business.
Monthly Revenue Retention Factor = (1 − Monthly Churn) × (1 + Expansion Rate) Simple LTV = ARPU / (1 − Revenue Retention Factor), capped at 120 months when factor ≥ 1 Gross Margin LTV = Simple LTV × Gross Margin % LTV:CAC Ratio = Gross Margin LTV / Customer Acquisition Cost CAC Payback = CAC / (Monthly ARPU × Gross Margin) Avg Customer Lifetime = 1 / Effective Monthly Revenue Decay, capped at 120 months when factor ≥ 1 DCF LTV = Σ (Monthly Revenue × GM × Revenue Retention Factor^(month−1)) / (1 + Monthly Discount Rate)^month
Result: LTV $12,500 | LTV:CAC 2.5x | Payback 13.3 months
At $500/mo ARPU with 3% monthly churn, average customer lifetime is 33 months. LTV = $500 × 33 = $16,667 × 75% GM = $12,500. With $5,000 CAC, LTV:CAC = 2.5x (below the 3x target). CAC payback = $5,000 / ($500 × 0.75) = 13.3 months (over the 12-month ideal). Reducing churn to 2% would push LTV:CAC to 3.75x.
LTV is only useful when you pair it with CAC, payback period, and retention. A high LTV with long payback may still be weak if cash conversion is slow or churn is rising.
Use churn and expansion sensitivity to test best-case and downside cases. Small changes in retention often matter more than incremental acquisition spend, so it is worth modeling those shifts before changing pricing or growth targets.
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This worksheet converts the selected churn input into a monthly churn rate, combines it with the entered monthly expansion rate to create an effective monthly revenue-retention factor, and then estimates customer lifetime value from recurring revenue, gross margin, and retention. It reports a simple gross-margin LTV, a discounted cash-flow LTV over a capped 120-month horizon, LTV:CAC ratio, CAC payback period, cohort-survival tables, and churn-sensitivity scenarios.
It is a scenario model rather than an accounting statement or board-approved forecast. Real SaaS cohorts can behave very differently by customer segment, contract term, revenue recognition policy, and expansion timing.
The industry standard is 3:1 or higher. Below 1:1 means you're losing money on every customer. 1-3x is marginal — you're making money but growth is risky. Above 3x is healthy. Above 5x suggests you may be under-investing in growth. David Skok (venture capitalist) popularized the 3x benchmark.
Under 12 months for most SaaS businesses. Under 6 months is excellent. Payback over 18 months puts strain on cash flow and makes growth capital-intensive. Enterprise SaaS with annual contracts can tolerate slightly longer payback (12-18 months) because of higher retention.
Monthly churn = 1 − (1 − annual churn)^(1/12). For example, 30% annual churn = 1 − 0.70^(1/12) = 2.9% monthly. Do NOT divide by 12: 30%/12 = 2.5% monthly, which understates the actual churn because it ignores compounding.
NRR measures how revenue from an existing cohort changes after churn and expansion. In this worksheet, annualized NRR is the monthly revenue-retention factor compounded across 12 months. NRR above 100% means expansion is more than offsetting churn in the modeled cohort.
Expansion revenue offsets part of the cohort revenue decay. In this worksheet, higher expansion increases the monthly revenue-retention factor and therefore raises simple and DCF-based LTV. If expansion fully offsets the modeled revenue decay, the page caps the result at a 120-month planning horizon instead of extrapolating indefinitely.
Yes, for rigorous analysis. Simple LTV assumes a dollar earned in month 36 is worth the same as today, but it's not. DCF-adjusted LTV discounts future revenue by your cost of capital (typically 10-15% for SaaS). This is more conservative and more accurate, especially for businesses with long customer lifetimes.