Calculate your Customer Lifetime Value (LTV) below by providing your Average Revenue Per User (ARPU), Gross Margin, and Churn Rate.
Lifetime Value (LTV) is the total amount of revenue a company can expect from a single customer account. It is a key metric for SaaS companies and other subscription-based businesses.
LTV is calculated using the formula: LTV = (ARPU * Gross Margin) / Churn Rate. Here, ARPU is the Average Revenue Per User, Gross Margin is expressed as a percentage, and Churn Rate is also expressed as a percentage.
LTV helps businesses understand the long-term value of their customers and make informed decisions about customer acquisition, retention, and pricing strategies. A higher LTV indicates more valuable customers.
Some strategies for increasing LTV include improving customer retention, increasing the average revenue per customer, enhancing customer satisfaction, and optimizing pricing and packaging. SaaS companies can also focus on up-selling and cross-selling to existing customers.