SaaS Lifetime Value Calculator

If you’re on this page, we suspect you may already know, but just in case — SaaS stands for software-as-a-service.  It’s basically an “on-demand software” or a software license that is centrally hosted on the internet with use extended to individuals or enterprises in exchange for a monthly or annual usage fee (subscription fee).

This calculator enables you to analyze your SaaS sales and the impact on the lifetime value of your customers–basically, quantifying how much money you will make off of one customer.  Remember, it’s best (and cheaper!) to retain existing customers than it is to acquire new ones (usually, unless you have a REALLY fussy existing customer).  With that in mind, you’ll want to minimize your churn rate as much as possible with an amazing customer success experience.

Here’s our decoder to help you out:

• ARPA: Average Revenue per Account, also called the Average Revenue per User. How much money you make on every single subscription account each month.
• Gross margin: this percentage represents the portion of each dollar of revenue that your company retains as profit. For example, if your gross margin 20%, it means that you retain $0.20 from every dollar of revenue. The calculator is set to 100% by default – which means that there are no costs per account on your side, but you can change it.
• Churn:  the percentage of users that cancel their subscription to your service each month out of the total number of users you have.
• LTV:  lifetime value of one customer account.  The net profit you gain from one customer account during their lifetime of buying from you. This is calculated automatically by the calculator.