Best way to calculate your lifetime value

When you talk with investors about what your SaaS business is worth, you need to calculate your customer lifetime value right. And while there are good shortcuts, using them might lead to a lower value than you want . In my role I've come to realize that the shortcuts rarely work well enough. In this article you'll learn the challenges in the common ways to calculate lifetime value and a concrete suggestion for a better one. Typically lifetime value is calculated by dividing your average monthly revenue per account (ARPA) by your monthly churn. You can get your ARPA by dividing your monthly recurring revenue (MRR) by the number of paying customers you have. And so, if your ARPA is 10 € and your monthly churn is 2%, your lifetime value would be 10/0.02 = 500. This is a great rule of thumb, but what if your churn fluctuates a lot month-over-month? If your business is seasonal, you might see your churn go up and down on a monthly basis. Can you just take the long term average? Can