Enter your ARPU and churn rate. Customer lifetime value, gross-margin-adjusted LTV, LTV:CAC ratio, and average customer lifespan — calculated instantly.
Example: $85/mo ARPU, 3% monthly churn → $85 ÷ 0.03 = $2,833 simple LTV. This is the standard industry formula and assumes 100% gross margin.
Example: $85 ARPU, 70% margin, 3% churn → ($85 × 0.70) ÷ 0.03 = $1,983. If your COGS is significant (e.g., infrastructure, support), this gives a truer picture of profit per customer.
Example: $2,833 LTV ÷ $400 CAC = 7.1x ratio. A ratio above 3x is generally considered healthy. Above 5x means you're generating significantly more value than it costs to acquire.
Example: 3% monthly churn → 1 ÷ 0.03 = 33.3 months (~2.8 years). Lower churn = longer lifespan = higher LTV. Improving churn by just 1% can dramatically boost lifetime value.
A LTV:CAC below 1x means you cannot profitably acquire customers at scale. Either increase ARPU, reduce churn, lower CAC, or all three. This is the most urgent financial warning sign in SaaS.
A 1–3x ratio is acceptable for early-stage companies burning money to grow. The logic: if LTV is 3x and payback is 12 months, you need ~12 months of runway. Tight, but survivable. Monitor this closely.
A 3–5x ratio is the standard "healthy" benchmark. You can acquire profitably, have room to experiment with higher CAC, and generate meaningful profit per customer. Most successful SaaS companies sit here.
A 5x+ ratio means each customer generates 5x what you spend to acquire them. At this efficiency, you can double down on acquisition, raise prices, or invest in product. This is the benchmark for Series A and beyond.
If your LTV is $2,000 and you want a 5x return, your max CAC is $400. If you're spending $600 to acquire a customer on a $400 budget, you're burning money on every customer. LTV sets the ceiling for your acquisition budget.
Improving churn by 20% often has a bigger impact on LTV than acquiring 20% more customers. If your LTV:CAC is healthy, invest in acquisition. If it's weak, fix retention first. LTV tells you which lever to pull.
Series A investors will ask about your LTV:CAC ratio. A 5x+ ratio with a payback period under 12 months signals efficient growth. Weak unit economics — regardless of growth rate — raises serious concerns about long-term viability.
Customers with a high theoretical LTV have demonstrated they stick around and spend. They're your best targets for annual plans, add-ons, and upsells. Focusing upsell efforts on high-LTV segments maximizes ROI.
RevScope connects to your Stripe and calculates accurate LTV, LTV:CAC ratio, MRR, churn, and a 6-month revenue forecast — handling trials, coupons, prorations, and annual plans automatically. $19/mo.
Further reading: How to Calculate Customer Lifetime Value — Full Guide · How to Reduce SaaS Churn · How to Calculate MRR · Free MRR Calculator · Free Churn Calculator
RevScope calculates LTV, MRR, churn, and LTV:CAC from your actual Stripe data — no manual entry required.
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