SaaS Metrics Calculator

SaaS (Software as a Service) businesses rely on a distinct set of financial metrics that differ fundamentally from traditional one-time-sale businesses. The recurring nature of subscription revenue makes these metrics essential for understanding business health.

Monthly Recurring Revenue (MRR): MRR = Σ (Active Subscribers × Monthly Plan Price)

Or broken into components: MRR = New MRR + Expansion MRR − Churned MRR − Contraction MRR

Annual Recurring Revenue (ARR): ARR = MRR × 12 This only holds for a stable business. Multiply a fast-growing company’s current MRR by 12 and you understate the next twelve months badly; do it for a shrinking one and you overstate them.

Churn Rate (monthly): Churn Rate = Customers Lost This Month ÷ Customers at Start of Month × 100%

Revenue Churn: Revenue Churn = MRR Lost to Cancellations ÷ MRR at Start of Period × 100%

Customer Lifetime Value (LTV): LTV = ARPU ÷ Monthly Churn Rate Where ARPU = Average Revenue Per User per month

Customer Acquisition Cost (CAC): CAC = Total Sales & Marketing Spend ÷ New Customers Acquired

LTV:CAC Ratio: the gold standard SaaS health metric: LTV:CAC = LTV ÷ CAC

• Below 1:1 → losing money on every customer
• 1:1 to 3:1 → marginal or acceptable
• 3:1 → healthy benchmark
• Above 5:1 → potentially under-investing in growth

Worked example: MRR = $50,000 across 1,000 customers, so ARPU = $50. Monthly churn = 2%. CAC = $300. LTV = $50 / 0.02 = $2,500 LTV:CAC = $2,500 / $300 = 8.3:1, which is well past the 3:1 benchmark. ARR = $50,000 × 12 = $600,000 Average customer lifetime = 1 / 0.02 = 50 months

Payback period = CAC / ARPU = $300 / $50 = 6 months, meaning half a year before that customer has paid back what it cost to win them. The industry target is under 12 months.

Type those four numbers into the boxes and you should get exactly these results back.

A word about the LTV formula. ARPU ÷ churn assumes churn stays flat forever, which it never does: the customers who were going to leave early leave early, and the survivors churn more slowly. Real LTV usually comes out higher than this, which is fine, but it means the number is a planning figure and not a promise.