How to use the churn and LTV calculator

Enter your MRR at the start of the month, the number of paying customers, how many cancelled, your gross margin and your customer acquisition cost. The calculator updates as you type. Expansion revenue is optional: add it if upgrades and add-ons are a meaningful share of MRR, because net revenue churn is what investors actually look at.

The formulas behind the numbers

  • Monthly customer churn = customers lost ÷ customers at start of month
  • Annual churn = 1 − (1 − monthly churn)12
  • Net revenue churn = monthly churn − monthly expansion rate
  • Average customer lifetime = 1 ÷ monthly churn (in months)
  • ARPU = MRR ÷ customers
  • LTV = (ARPU × gross margin) ÷ net revenue churn
  • LTV:CAC = LTV ÷ CAC
  • CAC payback = CAC ÷ (ARPU × gross margin), in months

What good looks like

  • Monthly churn under 2 percent for B2B SaaS, under 5 percent for SMB and prosumer products.
  • LTV:CAC between 3:1 and 5:1. Below 3 means acquisition is too expensive or churn too high; far above 5 usually means you are under-investing in growth.
  • CAC payback under 12 months for a bootstrapped company, under 18 for a funded one.

Why SEO changes these numbers

Organic search is the cheapest acquisition channel over time, so it pulls CAC down and improves payback without touching the product. Customers who arrive through bottom-of-funnel searches also tend to churn less, because they chose you after comparing alternatives. Our SaaS SEO strategy guide explains how to build that pipeline.

Frequently asked questions

Should I use gross or net churn?

Use both. Gross customer churn tells you how many logos you lose; net revenue churn tells you whether expansion covers it. A company can have positive gross churn and negative net churn, which is the healthiest position.

What if I have no CAC figure?

Divide last quarter’s total sales and marketing spend, including salaries, by the number of new paying customers in the same quarter.

Is this calculator accurate for annual plans?

Treat annual contracts as monthly by dividing the contract value by 12 for MRR, and count a cancellation in the month the customer does not renew.