Enter the revenue per account, gross margin, and churn % into the calculator below to determine the value of your software as a service.

## SaaS Formula

The following formula is used to calculate the lifetime value of a software as a service.

LV= [0.5 * 1 / churn(%) * (2 * RPA + RPA_growth * (1 / churn(%) – 1))] * GM

• Where LV is the lifetime value
• churn(%) is the percentage of customers that cancel each month
• RPA is the revenue per account
• GM is the gross margin (%)

## FAQ

How do i increase the lifetime value of my service?

The answer to this question is displayed nicely in the equation above. To increase the lifetime value, you must do at least one of the following; decrease the churn%, increase the RPA, or increase the margin.

How can i increase RPA of my service?

The RPA of a service can be increase by simply increase the price of the service, however, this doesn’t often go over well with the customer and leads to a higher churn (%). Instead, it’s best to offer new feature along with this price increase.

How do i reduce churn %?

Two words: Customer Service. Provide excellent customer service and you will retain clients no matter how bad your software as a service actually is. People want to feel like they are cared for.