SaaS Lifetime Value Estimate Calculator
What gross-contribution lifetime value does a constant-churn model imply? Check the formula, a worked example and the stated measurement limits.
Result for the values shown.
Calculations run in your browser.
What to enter
| Input | Meaning and units |
|---|---|
| Monthly ARPA (currency/account/month) | Enter monthly arpa in currency/account/month. Use the measurement basis described below. |
| Gross margin (%) | Enter percentage units: 80 means 80%, not 0.8. |
| Monthly customer churn (%) | Enter percentage units: 80 means 80%, not 0.8. |
Understanding your result
Use the estimate for a scenario comparison; compare observed cohort contribution before relying on a lifetime extrapolation.
Common mistakes
- Mixing annual churn with monthly ARPA inflates or deflates the model.
- Zero churn has no finite lifetime in this model and is rejected.
Check your calculation
- Use the worked example as a known reference case, then change one input at a time and check the direction and units of the response.
Choose a consistent measurement basis
Keep ARPA and customer churn on the same monthly interval and cohort scope. State which service costs are included in gross margin and whether early-life churn differs from mature churn.
A second independently worked case
Zero ARPA gives zero modeled contribution even with the same lifetime. Inputs: Monthly ARPA: 0 currency/account/month; Gross margin: 80 %; Monthly customer churn: 5 %. Results: Modeled contribution lifetime value: 0 currency/account; Modeled mean lifetime: 20 months.
Precision and output units
Displayed results: Modeled contribution lifetime value in currency/account, rounded to 2 decimal places; Modeled mean lifetime in months, rounded to 3 decimal places. Display rounding does not establish the precision of the original measurements or estimates.
Calculation checks, sources and review limits
What gross-contribution lifetime value does a constant-churn model imply?
What gross-contribution lifetime value does a constant-churn model imply? Check the formula, a worked example and the stated measurement limits.
Common uses
- What gross-contribution lifetime value does a constant-churn model imply
- Compare SaaS Lifetime Value Estimate across scenarios under matching definitions.
How it works
Multiply monthly average revenue per account by gross margin, then divide by monthly customer churn as a fraction. The reciprocal churn rate gives the model’s mean lifetime.
Worked example
100 × 0.8 ÷ 0.05 = 1,600; the constant-churn lifetime is 20 months. Enter monthly arpa 100 currency/account/month, gross margin 80 %, monthly customer churn 5 %. The independently worked result is modeled contribution lifetime value 1600 currency/account; modeled mean lifetime 20 months. Compare this example with your reporting definitions before substituting your own figures.
FAQ
Why is zero churn rejected?
The reciprocal-churn model has no finite modeled lifetime at zero churn. Reporting an unlimited value would conceal the limits of this extrapolation, so this tool requires a positive churn rate.
Does a modeled lifetime of twenty months predict each customer’s duration?
No. It is the mean lifetime implied by a constant-churn model. Individual customers and cohorts can behave differently, particularly when churn changes with customer age.