SaaS Metrics Calculator

How This Calculator Works

A subscription business’s health comes down to whether a customer is worth more than it costs to acquire them — the LTV:CAC ratio is the single number that answers that. Enter your average revenue per customer, monthly churn rate, gross margin, and customer acquisition cost, and this calculator shows your Monthly and Annual Recurring Revenue, Customer Lifetime Value, and how long it takes to earn back what you spent acquiring a customer.

Two subscription businesses can have identical revenue and still be in very different financial shape — one might be acquiring customers cheaply relative to what they’re worth, while the other is spending more to acquire a customer than that customer will ever generate. The metrics here are the standard way investors, operators, and finance teams at subscription businesses actually measure that difference.

The Formula

$$\vE{\text{Customer Lifetime (months)}} = \frac{1}{\vA{\text{Monthly Churn Rate}}}$$ $$\vF{\text{LTV}} = \vB{\text{ARPU}} \times \vC{\text{Gross Margin}} \times \vE{\text{Customer Lifetime}}$$ $$\text{LTV : CAC Ratio} = \frac{\vF{\text{LTV}}}{\vD{\text{CAC}}}$$

Customer lifetime assumes a roughly constant monthly churn rate over time — a standard simplification, not a guarantee of any individual customer’s actual tenure. LTV is calculated on gross margin, not raw revenue, since margin is the money genuinely available to have funded acquiring the customer.

Worked Example

$100/month average revenue per customer, 500 customers, 2% monthly churn, 80% gross margin, and a $1,200 customer acquisition cost:

1. Customer lifetime: $\frac{1}{\vA{0.02}} = \vE{50} \text{ months}$.
2. LTV: $\vB{100} \times \vC{0.8} \times \vE{50} = \vF{\$4{,}000}$.
3. LTV : CAC ratio: $\frac{\vF{4{,}000}}{\vD{1{,}200}} \approx 3.3 : 1$.
4. CAC payback period: $\frac{\vD{1{,}200}}{\vB{100} \times \vC{0.8}} = 15 \text{ months}$.

A 3.3:1 ratio clears the commonly-cited 3:1 healthy benchmark, though the 15-month payback period runs a bit longer than the commonly-cited 12-month benchmark — worth watching if cash flow is tight even though the long-run economics look solid.