The average Net Present Value of the Company’s customers is defined by the Average Monthly Gross Profit multiplied by Customer Lifetime.
CLTV = ARPA * GM * Customer Lifetime
ARPA is the Average Revenue per Account as defined by the Average ARR of the customer base. GM is the Subscription Revenue Gross Margin. Customer Lifetime is the average tenure of a customer and is calculated as the inverse churn rate for mature SaaS companies. It is often set at between 3 and 5 years for early-stage companies.
The average Net Present Value of the Company’s customers is defined by the Average Monthly Gross Profit multiplied by Customer Lifetime. CLTV = ARPA * GM * Customer Lifetime ARPA is the Average Revenue per Account as defined by the Average ARR of the customer base. GM is the Subscription Revenue Gross Margin. Customer Lifetime is the average tenure of a customer and is calculated as the inverse churn rate for mature SaaS companies. It is often set at between 3 and 5 years for early-stage companies.
