SaaS unit economics (LTV, CAC, churn)
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About SaaS unit economics (LTV, CAC, churn)
This page is about subscription software businesses: average revenue per account per month, gross margin, monthly churn as a share of customers, and customer acquisition cost. We compute a simple LTV = contribution margin per month times expected lifetime in months, where lifetime is 1 divided by monthly churn. That model breaks when churn is not exponential or when expansion revenue dominates—use a proper FP&A model for board decks. Titles and copy repeat “SaaS subscription” to separate this from “loan to value” (LTV) in personal finance.
Key Features
- ARPA, margin %, monthly churn %, CAC inputs
- Outputs: contribution margin, implied lifetime, LTV, payback months, LTV:CAC
- Runs locally in the browser
Use Cases
- Classroom and blog examples for B2B SaaS metrics
- Orientation for founders new to the “3 : 1 LTV:CAC” rule of thumb
Pro Tips
- If you report net revenue retention above 100%, simple logo churn LTV can understate reality
- Align churn period with your measurement (cohorts vs. monthly spot rate)
Frequently Asked Questions
Is this “LTV” the same as mortgage LTV?
No. In SaaS, LTV usually means “lifetime value” of a customer, not loan-to-value. This page is only for that SaaS sense.
Why is my LTV so high or infinite?
Very low churn makes the naive 1/churn model explode. In practice caps, cohorts, and NRR change the story.