Lifetime Value (LTV) can help your entire company understand the actual value that you can expect to receive from a single customer over the course of your relationship with them. It is the metric that tells you whether customers are happy and enjoying your product or that customers are ready to churn and you should reassess your strategy. Here we walk through exactly how to calculate Lifetime Value (LTV), including what to and not to include in the calculation, as well as how to optimize this crucial SaaS metric.

1. SaaS Lifetime Value (LTV):
Calculating and Optimizing
Lifetime Value (LTV)
Price Intelligently’s SaaS Metric Mondays

2. Let’s talk about LTV
Your SaaS company’s key to
longevity
Lifetime Value (LTV)

3. LTV =
Lifetime Value
Lifetime Value (LTV)

4. LTV =
The total dollar amount you’re likely to receive from an
individual customer over the life of their account with you.
Lifetime Value allows for you to accurately account for and
predict your businesses revenue and profit.
Want To See What Your Lifetime Value (LTV) Is Right Now?
Get your free ProfitWell account – 1-click SaaS Metrics >>
Lifetime Value (LTV)

5. Here’s LTV broken down visually
Lifetime Value (LTV)

6. Visuals and definitions are great
but…why should you even care?
Lifetime Value (LTV)

7. “Want your SaaS to last? LTV is the
fountain of youth, the key to your
SaaS company’s longevity”
Lifetime Value (LTV)

8. More specifically…
Understanding your LTV can help
Identify customer
personas who result in the
best retention, as well as
the highest opportunity for
expansion revenue
Sales
Improve projections and help
accurately determine the
companies profitability
FinanceMarketing
Identify which channels
and marketing
programs bring in the
best customers
See the breakdown of your LTV with ProfitWell >>
Lifetime Value (LTV)

9. Lets go deeper and
calculate LTV like a #SaaS
superstar
Lifetime Value (LTV)

10. In your LTV calculation you only want to include active
customer in your “ARPA metric” & Fully churned customers
in the “customer churn metric”
LTV Criteria Breakdown
Items to Include Items to Exclude
ARPA
(Average Revenue Per
Account)
Inactive Users
Customer Churn Delinquent Customers
Lifetime Value (LTV)
Calculating LTV is all about
ARPA & Churn

11. LTV
EQUATION:
LTV
SIMPLIFIED:
EXAMPLE:
LTV
LTV Calculation Breakdown
Lifetime Value (LTV)
ARPA
Customer Churn Rate
Sum of all customer MRR / Total # of
customers
# of customers who churned / Total # of customers
$100
ARPA
0.1 Churn
Rate
$1000 LTV

12. Once you master calculating
LTV you can benefit your
SaaS business even more by
optimizing it
Lifetime Value (LTV)

13. Extend your LTV lifespan by:
1. Cross-sell / upsell add-ons
2. Product line expansion
3. Scalable pricing along a value
metric $
$
$
$ $
$
$
$
$
$
$
$
Lifetime Value (LTV)

14. Grow your customers’ LTV by building add-on revenue into your product.
Be sure to find add-ons that supplement both LTV through increased
revenue, but also retention. Check out companies like Appfolio for a great
example.
Key Optimization
Cross-sell – Upsell
Visitors
Stranger
Leads
Opportunity
Customer
Lifetime Value (LTV)

15. Give customers not only add-ons, but entirely new products.
You already have them in the door, so make sure you
capitalize on that relationship through adding pieces of
product to their workflow.
Key Optimization
Product line expansion
Lifetime Value (LTV)
PRODUCT

16. Build your pricing in away that supports growth by
utilizing a value metric. This allows you to get at all points
on the demand curve, ensuring you’re making more
revenue as your customer uses your product more.
Key Optimization
Scalable Pricing
Lifetime Value (LTV)

17. Boom. Now you can maximize your
SaaS longevity with your new
mastery of LTV
Lifetime Value (LTV)

18. Want real time SaaS Metrics?
Know and understand your SaaS Metrics
with ProfitWell for free – the most accurate
metrics on the market
Click here to get your free ProfitWell account >>
Lifetime Value (LTV)