How to use the result
Use the output to see how pricing, churn and acquisition cost fit together. A small change in churn can have a large effect on LTV, so compare conservative and optimistic assumptions before drawing conclusions.
Example
With 500 customers at $80 ARPA, MRR is $40,000 and ARR is $480,000. At 80% gross margin and 3% monthly churn, simplified LTV is about $2,133.
Common mistakes
Do not use blended customer counts if free users, trials and paying customers behave differently. Keep churn, ARPA and CAC definitions consistent.
What this does not capture
Expansion revenue, contraction, annual plans, discounts, gross retention and acquisition channel mix can change unit economics significantly. Treat this as a simple planning model, not a full cohort analysis.
Last reviewed: 2026-05-17