LTV (Customer Lifetime Value) is the most important number for any subscription or repeat-purchase business — and one of the easiest to mismeasure. Most teams compute blended LTV across all customers, which over-counts contract values and under-counts churn. This calculator computes both blended and qualified-cohort LTV, computes LTV:CAC ratio against KeyBanc 2024 benchmarks (3:1 minimum, 4.5:1 healthy median, 7:1+ top quartile), and simulates how retention improvements compound over time.
Standard SaaS formula: LTV = ARPA × gross margin ÷ monthly churn rate. Trap: this assumes constant churn, which over-states LTV for cohorts with declining retention. For more accurate numbers, use cohort-based LTV (track actual revenue per cohort over 12-36 months) or NRR-adjusted LTV (incorporate net revenue retention to credit expansion). The calculator surfaces both standard and NRR-adjusted views.
Blended LTV across all customers averages enterprise + SMB + free trial conversions, masking economics that vary 5-10× by segment. Enterprise customers might have $50K LTV at 5:1 LTV:CAC; self-serve might have $500 LTV at 1.5:1. The blended number tells you nothing about which to scale. Segmented LTV lets you make channel and pricing decisions per cohort. The calculator supports up to 4 segments simultaneously.
KeyBanc 2024 SaaS Survey: median 4.5:1 for healthy SaaS, 7:1+ for top quartile. 3:1 is the floor. Below 3:1 indicates customer economics are too tight to scale paid acquisition profitably; below 1:1 means churn is winning. Above 10:1 you may be under-investing in growth and should accelerate spend.
Yes — always use gross-margin-adjusted LTV (revenue × GM%, not raw revenue). Otherwise you're comparing top-line revenue against fully-loaded CAC, which overstates economics. Most healthy SaaS uses 70-80% gross margin assumption; verify with your actual COGS.
Two ways: (1) Use NRR-adjusted LTV — multiply standard LTV by (NRR/100) to credit expansion as part of customer value; (2) Compute cohort LTV from actual historical data including expansion. Method 1 is simpler and works well if NRR is stable. Method 2 is more accurate for high-expansion businesses (data, infra) where contract values grow significantly over time.
Because LTV ≈ 1 / churn. At 1% monthly churn, LTV multiplier is 100 months. At 2% monthly churn, it's 50 months — half. The relationship is hyperbolic, not linear. Cutting churn from 5% → 2.5% doesn't double LTV, it doubles it. This is why retention work usually has higher ROI than acquisition work in mature SaaS.
For SaaS, 5 years is standard; longer creates compounding error from churn assumptions. For e-commerce, 2-3 years is typical since repeat patterns are more variable. For one-time purchase businesses, "LTV" is essentially deal value × repeat rate × number of repeats — much simpler.
Sources: KeyBanc Capital Markets SaaS Survey 2024 · OpenView 2023 SaaS Benchmarks · Bessemer State of the Cloud 2024