Free online Saas LTV Calculator shows the average revenue per account and ltv of customer
What is LTV?
Customer Lifetime Value (LTV) represents the average revenue that a customer generates before they churn, offset by gross margin. LTV in SaaS is only ever used as a forward-looking estimate of the future, but calculating a reasonable estimate allows you to make smarter decisions for your business.
How is LTV useful?
Balancing customer acquisition spend
If I know my LTV is ‘X’, I can confidently spend ‘Y’ to acquire customers without much risk.
Determining payback period
How long does it take for a customer to “pay back” their acquisition cost? The longer this is, the more risk there is tied up in the business.
Many investors in SaaS want to see LTV as a part of their “health” assessment of a prospective investment.