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Simple Customer Lifetime Value Step-By-Step Financial Calculator







Business Essentials

Breakeven Analysis


Gross Margin


Cost Markup


Set Price Using Markup


Return on Investment (ROI)



Sales and Marketing

Convert Leads to Sales



SaaS Metrics

Customer Acquistion Cost (CAC)


Customer Churn


Customer Lifetime Value (LTV)


Monthly Recurring Revenue (MRR)


SaaS Company Viability



What is Customer Lifetime Value?



Customer lifetime value (LTV) is the average total revenue you expect to earn per customer. In it's simplest form, the customer lifetime is determined by the monthly revenue for the customer x the anticipated number of months' retention.

How to Calculate Customer Lifetime Value



This simple metric is most often combined with several other SaaS calculations to produce a key set of SaaS monitoring numbers.

The LTV:CAC ratio is a measure you will visit often. It is a key indicator of the potential viability for your SaaS company. While there is no one absolute ratio, 3:1 or greater is generally accepted as a healthly number. Anything below this ratio is a red flag to revisit the individual SaaS metrics.



Your calculations can be based on any period or product category. Just be sure that all of your numbers are for the same period and product..

Number of Customers
MRR per Customer $
Margin %
Churn Rate %
Customer Acquisition Cost (CAC) $






How to Calculate SaaS Health

  • Determine the packages you offer and the monthly pricing for each.
  • Determine the number of subscribers for each package.
  • Determine the average subscriber lifetime (retention) for each package.
  • Determine your gross margin.
  • Determine your churn rate.

  • Your CRM and accounting system are excellent sources for this information.




    Example ...

    Package Monthly Price # Subscribers Avg. Months
    Starter $ 10 500 12
    Growth $ 25 1000 30
    Premier $ 75 750 24
    Total Subscribers   2250  

    Monthly recurring revenue (MRR) = (($10 x 500) + ($25 x 1000) + ($75 x 750)) / 2250 = $ 96,250 / 2250 = $42.78

    Average revenue per account (ARPC) = (($10 x 500 x 12) + ($25 x 1000 x 30) + ($75 x 750 x 24)) / 2250 = $ 960

    B2B Solutions Company
    Total Subscribers 2250
    Customer Acquisition Cost (CAC) $ 300
    Average MRR per Customers $ 42.78
    Monthly Churn Rate 2.3 %
    Margin 85 %
    LTV $1,581
    LTV:CAC Ratio 5.27

    ($42.78 x .85) = $36.36 / .023 = $1,581

    $1,581 / $300 = 5.27







    Simple Customer Lifetime Value Formula Cheatsheet



    From the MRR calculator:

  • MRR = Monthly subscription revenue per number of customers)

  • From the churn calculator:

  • Churn = ((Ending customer count - beginning customer count) = gain/loss / beginning customer count)

  • From the gross margin calculator:

  • Gross margin = (Revenue - cost of goods sold) / revenue

  • Putting it all together:

  • (MRR x margin) / churn) = LTV per customer

  • LTV:CAC = LTV/CAC









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