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.
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.
