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Software, SaaS, and the numbers behind them
Practical writing on software development, SaaS strategy, and the unit economics behind products that last.
Run your own numbers
SaaS metrics calculator
Change an input and every figure updates. Nothing leaves your browser.
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Average revenue per user: $100 a month
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%
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- Lifetime value (LTV)
- $2,667
- Gross profit per customer before they churn.
- Expected lifetime
- 33.3 months
- About 2.8 years on average.
- LTV to CAC
- 4.4 : 1
- At or above the common 3:1 rule of thumb.
- CAC payback
- 7.5 months
- Months of gross profit needed to earn back CAC.
- MRR lost to churn each month
- $600
- 6 customers leave each month.
- Customers retained after a year
- 69.4%
- $13,877 of today's MRR remains with no new sales.
What a change in churn is worth
Same revenue, margin and customers. Only monthly churn moves.
| Monthly churn | LTV | Change in LTV | MRR after 12 months |
|---|---|---|---|
| 1% (-2 pt) | $8,000 | +200% | $17,728 |
| 2% (-1 pt) | $4,000 | +50% | $15,694 |
| 3% (current) | $2,667 | baseline | $13,877 |
| 4% (+1 pt) | $2,000 | -25% | $12,254 |
| 5% (+2 pt) | $1,600 | -40% | $10,807 |
How these numbers are calculated
- ARPU = MRR divided by active customers.
- LTV = ARPU x gross margin divided by monthly churn.
- Expected lifetime = 1 divided by monthly churn, in months.
- CAC payback = CAC divided by monthly gross profit per customer.
- Retained after 12 months = (1 minus monthly churn) raised to the 12th power.
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