PricingNest

LTV Calculator (SaaS)

Estimate customer LTV from ARPA, gross margin, and monthly churn rate.

Inputs

Scenarios

Applies to the selected input only; adjust other inputs manually if needed.

Results

Estimated LTV
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Implied average lifetime (months)
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Insights

Auto-generated from your inputs.
Adjust inputs to see recommendations.

Compare

Save a baseline to see deltas for every output.
Estimated LTV
Baseline -
Delta -
Implied average lifetime (months)
Baseline -
Delta -

Sensitivity

Adjust the input to see how outputs respond to small changes.
Estimated LTV
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Base -
High -
Implied average lifetime (months)
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Guide

This page is a calculator first, but it's also a quick reference you can share internally. Start with the presets, then adjust inputs and copy the share link. Example defaults for this tool are shown below.

Example Inputs Outputs How it works Modeling tips Validation checks Common mistakes Interpretation Use cases Mini walkthroughs Scenarios Edge cases FAQ

Example (defaults)

Example inputs: ARPA (monthly) = 200, Gross margin (%) = 80, Monthly churn (%) = 3

Estimated LTV
$5,333.33
Implied average lifetime (months)
33.333333

Inputs explained

Input Default Notes
Currency USD Adjust to match your product assumptions.
ARPA (monthly) 200 Adjust to match your product assumptions.
Gross margin (%) 80 Adjust to match your product assumptions.
Monthly churn (%) 3 Adjust to match your product assumptions.

Outputs explained

Output What it means
Estimated LTV A money value based on your selected currency.
Implied average lifetime (months) A numeric value derived from the inputs.

How it works

  • Implied lifetime (months) is approximately 1 / churn rate (for a simple constant churn model).
  • Gross profit per month = ARPA x gross margin.
  • LTV = gross profit per month x implied lifetime.

Modeling tips

  • Use ARPA as monthly recurring revenue per account, not total revenue.
  • Use gross margin after direct COGS to avoid overstating LTV.
  • Enter monthly churn as a percentage, not annual churn.
  • If churn is very low, cap lifetime to keep LTV realistic.
  • Use net churn if expansion materially offsets churn.
  • Use ARPA net of discounts, credits, and refunds.

Validation checks

  • Implied lifetime should equal 1 / churn rate (as a decimal).
  • LTV should equal ARPA x gross margin x lifetime.
  • If churn is 0, LTV is not meaningful; enter a small churn floor.
  • Gross margin should be between 0 and 100; validate inputs if it is not.

Common mistakes

  • Using revenue instead of gross profit as the LTV base.
  • Plugging in annual churn as a monthly churn rate.
  • Ignoring expansion and downgrades in ARPA assumptions.
  • Assuming churn stays constant across all cohorts.

Interpretation

  • Use LTV as a planning range, not a single point estimate.
  • If LTV is extremely high, check churn inputs and cap lifetime.
  • Compare LTV to CAC to validate acquisition efficiency.
  • Segment LTV by plan to guide packaging decisions.

Use cases

Marketing ROI
Compare LTV to CAC to decide how much you can spend to acquire users.
Pricing strategy
Model how ARPA changes from new pricing impact long-term value.

Mini walkthroughs

Baseline LTV
  1. Enter ARPA, gross margin, and churn rate.
  2. Review implied lifetime and LTV.
  3. Use LTV as a planning range.
Sensitivity check
  1. Lower churn by 1 point or raise margin.
  2. Compare LTV changes across scenarios.
  3. Prioritize levers with the biggest lift.

Scenarios

SMB LTV
ARPA 100 with 4% churn to estimate conservative lifetime value.
Mid-market LTV
ARPA 450 with 2% churn to model longer retention and higher LTV.
Churn reduction impact
Compare 3% vs 2% churn to see LTV sensitivity.
Expansion-adjusted LTV
Increase ARPA to reflect upsell and see the impact on LTV.

Edge cases

  • If churn is 0, lifetime is infinite; set a practical churn floor.
  • If gross margin is near 0, LTV will be near 0 regardless of ARPA.
  • If ARPA is 0, LTV will be 0; confirm pricing inputs.
  • If churn is above 50% monthly, implied lifetime is under two months.

FAQ

What is ARPA?
Average Revenue Per Account (ARPA) is your average subscription revenue per customer per month.
Why is lifetime about 1 / churn?
For a simple constant churn model, the expected lifetime in months is approximately the inverse of the monthly churn rate.
Should I use gross or net churn?
For LTV, many teams start with gross revenue churn to avoid over-crediting expansion. Use net churn if your model explicitly includes expansion dynamics.
Do I include implementation fees in ARPA?
No. One-time fees should be tracked separately so LTV reflects recurring value.
How do I cap LTV for long-tenure customers?
Use a maximum lifetime based on historical cohorts (for example, 60 months) to avoid overstating value.
Should I use contribution margin instead of gross margin?
If onboarding, support, or infra costs scale with customers, contribution margin can be a more realistic input.