Live October 1st. Join waitlist, get early-bird rate for 6 months.Claim yours today →
Three LTV figures, not one — because the number most calculators give you is the one you should not use.
Most LTV calculators return one number: revenue per customer divided by churn. It is the largest of the three figures below and the least useful, because it counts money you never keep.
Total MRR divided by total customers
Customers lost this month ÷ customers at the start
SaaS typically 75–85%
All three figures assume churn stays constant. Real cohorts churn hardest in the first months and then flatten, so treat these as directional rather than precise.
The revenue figure is 1.3× the margin-adjusted one. It counts money that goes straight back out as hosting, support and payment fees — which is why it flatters every LTV:CAC ratio built on it.
Margin-adjusted LTV at other churn rates
| Method | Formula | At $50 ARPU, 3% churn, 80% margin |
|---|---|---|
| Revenue LTV | ARPU ÷ churn | $1,667 |
| Margin-adjusted | (ARPU × margin) ÷ churn | $1,333 |
| Discounted | (ARPU × margin) ÷ (churn + discount rate) | $1,053 |
The differences are not rounding. Revenue LTV is 58% higher than the discounted figure, and if you build an LTV:CAC ratio on it you will conclude your acquisition is a third more efficient than it is.
A customer paying $50 a month does not give you $50. Hosting, support, third-party APIs and payment fees come out first. At an 80% gross margin you keep $40 — so lifetime value built on the $50 figure is counting money that was never yours.
Revenue arriving in year four is worth less than revenue arriving this month — you cannot spend it, and you carry the risk of never receiving it. Discounting at around 10% a year is the convention. The longer your customer lifetime, the larger the correction.
Every formula above uses 1 ÷ churn for lifetime, which assumes churn is constant. It never is. Real cohorts churn hardest in the first months and then flatten, so a single early rate extrapolated forever understates the customers who stay.
If you have twelve months of cohort data, the cohort retention calculator sums the actual curve instead of assuming one.
GOOD QUESTIONS
On its own, none — LTV only means something against CAC. A $200 LTV is excellent if customers cost $40 to acquire and terrible if they cost $300. Use the LTV:CAC ratio rather than judging LTV alone.
Margin-adjusted, always, and especially in any LTV:CAC ratio. Revenue LTV counts money that leaves again as hosting, support and payment fees. At an 80% margin it overstates real value by 25%.
Because it assumes a constant churn rate. Real cohorts churn hardest early and then flatten, so extrapolating an early rate forever misrepresents the customers who survive. It is directionally useful and precisely wrong.
They reduce gross margin, which reduces LTV proportionally. On a $50 plan, 2.9% + 30¢ costs about 3.5% of revenue every month for the life of the customer — a small percentage that compounds over years.