SaaS Churn Rate & MRR / LTV Calculator
Calculate Monthly Recurring Revenue (MRR), Annual Run Rate (ARR), Customer Lifetime Value (LTV), LTV:CAC ratio, and customer lifetime duration from churn rates.
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Frequently Asked Questions
What is a good monthly churn rate for a SaaS business?
For B2B SaaS serving mid-market and enterprise clients, a healthy monthly churn rate is 0.5% to 1.5% (approx 6-15% annually). For B2C or self-serve micro-SaaS, monthly churn rates between 3% and 5% are common due to lower switching barriers.
How is Customer Lifetime Value (LTV) calculated?
In SaaS economics: LTV = Average Revenue Per User (ARPU) multiplied by Average Customer Lifetime (1 / Churn Rate) multiplied by Gross Margin %. For example, an ARPU of $50 with a 4% monthly churn rate yields an LTV of $50 / 0.04 = $1,250.
What is an optimal LTV:CAC ratio for venture capital?
An LTV:CAC ratio of 3.0× is the gold standard benchmark. Ratios below 3.0× indicate customer acquisition is too expensive or retention is too low. Ratios above 5.0× suggest the company is underinvesting in sales and marketing growth.
What is Net Revenue Retention (NRR)?
NRR measures the percentage of recurring revenue retained from existing customers over a given period, including expansions, upgrades, and cross-sells, minus cancellations. Top-quartile SaaS companies achieve NRR over 115-125%.