Calculator Guides
How to Calculate LTV (Customer Lifetime Value): Formula & Free Calculator
Customer Lifetime Value (LTV) measures the total revenue a customer generates over their entire relationship with your product. It is the counterpart to CAC and determines whether your business model is viable.
The LTV formula
LTV = ARPU x Customer Lifetime. Customer Lifetime = 1 / Monthly Churn Rate. For example, if ARPU is $30 and monthly churn is 5%, Customer Lifetime is 20 months, and LTV is $600.
For more accuracy, use gross margin LTV: multiply by your gross margin percentage to account for the cost of serving each customer.
How to improve LTV
There are two levers: increase ARPU (through upsells, add-ons, or price increases) or reduce churn (through better onboarding, support, and feature development).
Reducing churn has a compounding effect. Dropping monthly churn from 5% to 3% increases customer lifetime from 20 to 33 months — a 65% increase in LTV.
Using the BigIdeasDB LTV Calculator
Navigate to Free Tools > LTV Calculator. Input your ARPU and churn rate. The calculator shows your LTV, LTV:CAC ratio, and projected revenue over time with charts.
FAQ
What is a good LTV for SaaS?
LTV should be at least 3x your CAC. For micro SaaS at $30/month with 3% monthly churn, LTV is approximately $1,000.
How does churn affect LTV?
Churn has an outsized impact. Cutting monthly churn from 5% to 3% nearly doubles your LTV because customer lifetime increases dramatically.
Is the LTV calculator free?
Yes. BigIdeasDB's LTV Calculator is 100% free with no login required.
Related help pages
Calculator Guides
How to Calculate CAC (Customer Acquisition Cost): Formula & Free Calculator
Learn how to calculate Customer Acquisition Cost for your SaaS. Understand the formula, benchmark against industry averages, and optimize spending.
Calculator Guides
How to Calculate Churn Rate for SaaS: Formula, Benchmarks & Free Calculator
Learn how to calculate churn rate for your SaaS business. Understand customer churn vs revenue churn, benchmarks, and use our free calculator.
Calculator Guides
How to Calculate MRR (Monthly Recurring Revenue): Formula, Examples & Free Calculator
Learn how to calculate MRR for your SaaS business. Understand the formula, track growth, expansion, churn, and net new MRR with our free calculator.
