SaaS Pricing Calculator

SaaS pricing is backwards from most products: you set the price from the cost of acquiring the customer, not the cost of building the software. If it costs 500 to acquire a customer and you want a 3:1 LTV:CAC ratio, that customer needs to deliver 1,500 in lifetime gross margin. Divide by contract length to get the required monthly contribution, then divide by gross margin percentage to set the list price.

500 CAC × 3 target ratio = 1,500 required LTV. Over a 24-month contract, that's 62.50/month gross margin. At 80% gross margin the price lands at 78/month. Most SaaS companies target 3:1 LTV:CAC as the floor and 5:1 as healthy; venture-backed firms often accept 1:1 early.

This method assumes steady retention. If churn is high (monthly churn above 3%), effective contract length drops and prices need raising. Annual contracts paid upfront also effectively lengthen LTV by reducing churn risk, which is why most SaaS companies discount 10-20% for annual billing.

A worked example

Try the defaults: customer acquisition cost of 500, target ltv:cac ratio of 3, gross margin of 80%, avg contract length of 24 months. The tool returns 78.13. You can adjust any input and the result updates as you type — no submit button, no reload. That's the real power here: seeing how sensitive the output is to one or two assumptions.

What moves the number most

The result responds to Customer Acquisition Cost, Target LTV:CAC Ratio, Gross Margin %, Avg Contract Length (months), and LTV Target (info only). Not every input has equal weight. Adjusting one input at a time toward extreme values shows which ones move the result most.

The formula behind this

Required LTV = CAC × target ratio. Monthly gross margin needed = required LTV ÷ contract months. Price = monthly margin ÷ gross margin %. Everything the calculator does is shown in the formula box below, so you can check the math against your own spreadsheet if you want.

What the score tells you

Headline financial numbers — income, savings, debt — each tell part of the story. This calculation stitches several together into a single read you can track over time. The value is in the direction, not the absolute number.

What this doesn't capture

The score is a composite of the inputs you provide. Life context — job security, family obligations, health, housing — doesn't appear in the math but shapes the real picture. Use the number as a prompt, not a verdict.