From MRR, monthly churn, CAC, and ARPU, compute annual recurring revenue (ARR), customer lifetime value (LTV), and the LTV/CAC ratio.
Input Data
Results
At a glance:ARR annualises MRR; LTV is margin-adjusted lifetime revenue; LTV/CAC compares lifetime value to acquisition cost.
Formula
arr = mrr × 12
ltv = arpu × 12 / monthlyChurnPct%
ltvToCac = ltv / cac
$$ARR = MRR \times 12$$$$LTV = \dfrac{ARPU}{churn}, \quad \dfrac{LTV}{CAC} = \dfrac{LTV}{CAC}$$How to Use
- Enter the MRR, churn, CAC, and ARPU.
- Review the ARR, LTV, and LTV/CAC ratio (above 3 is healthy).
FAQ
How are ARR, LTV and LTV/CAC calculated?
All three derive from your core inputs. ARR = MRR × 12 (e.g. MRR 100,000 → ARR 1,200,000). LTV uses the common shortcut ARPU ÷ monthly churn (lifetime ≈ 1 ÷ churn months × ARPU); at ARPU 500, churn 5%, LTV = 10,000. LTV/CAC = LTV ÷ CAC; at CAC 3,000 that is about 3.33. Note this LTV is revenue-based and simplified; the stricter version uses gross margin and discounting for a more conservative figure.
What LTV/CAC ratio is healthy, and why does churn matter so much?
LTV/CAC is the core unit-economics gauge of SaaS sustainability. The widely cited benchmark is about 3×, meaning a customer's lifetime value is roughly three times the cost to acquire. Below 1× you lose money on each customer (growth just loses faster); far above 3× (e.g. 5×+) may signal under-investment in growth. Churn is the number-one enemy because it shortens lifetime (LTV ∝ 1/churn) and acts like a leaking bucket — high churn erodes the revenue you paid to acquire, so lowering churn is often the most effective lever for health.
What simplifications and limits does this calculator have?
It is a quick estimate. (1) LTV uses revenue, not gross margin — enter ARPU as monthly gross profit for a conservative result. (2) It assumes a constant churn rate, though cohorts differ. (3) No discounting of future revenue. (4) ARR assumes MRR stays flat over the year. (5) CAC must include all sales and marketing costs, or the ratio distorts. Use it to sense health and run sensitivity (e.g. lower churn → higher LTV), not for formal financial decisions.
Why are MRR and ARR the foundation of SaaS valuation?
Recurring revenue is far more valuable than one-off sales. MRR/ARR are predictable (auto-renews if retained), compound as new customers stack on top of existing ones, carry high lifetime value, and command premium valuation multiples — which is why so much software has moved to subscriptions. But this value rests on low churn; without it, the 'recurring' part is illusory. Always read MRR/ARR together with churn to judge revenue quality.
Which stage of company should use these metrics, and what if data is thin?
Early stage: samples are small and volatile, so don't over-read single months — focus on whether the product solves a real need and early customers renew. Growth stage: ARR growth, churn trend and LTV/CAC health become critical to validate unit economics and fundraising. Mature: watch net revenue retention and per-segment churn. With thin early data: average several months, separate signal from noise, use conservative assumptions (higher churn, gross-margin LTV), pair numbers with customer conversations, and treat metrics as a dashboard you recalibrate as data grows.
Content review: Calculatorism Finance Team. Results are for reference only; please refer to the relevant authorities for the official figures.