What's a member worth to you?
And so how much can you spend to get one? See your lifetime value, your budget per member and per visitor, and the affiliate commission it covers.
What a member is worth, in three numbers.
Lifetime value sounds like a finance term. For a membership it’s simple arithmetic you can do on a napkin.
Price × what's left after costs
What you keep
Not the price, the part of it that's yours: after card fees, platform fees and whatever a member costs you to serve.
1 ÷ monthly churn
How long they stay
At 5% churn the average member stays 20 months; at 10%, 10. Halving churn doubles what every member is worth.
The stricter of two rules
What you can spend
A third of lifetime value, or what a new member pays you in the months you're willing to wait to get your money back. Whichever is lower is your budget for getting one. Both rules are David Skok's SaaS guidelines.
The two rules come from David Skok’s SaaS Metrics 2.0: lifetime value above 3× the cost of getting a customer, and that cost earned back in under 12 months. They’re guidelines for software companies, not laws, and this calculator applies the 3:1 rule after fees, which is stricter than Skok’s version.
Know what a member is worth, and you can work out how many you need. Plan a revenue goal.
Four ways to make every member worth more.
A higher lifetime value raises what you can spend to grow. Each lever has a tool to test it.
Keep them longer
Lower churn is the biggest lever: it multiplies everything else. An annual plan stops members leaving mid-year.
Would an annual plan keep more?Charge more
A higher price raises what you keep from every payment, if it doesn't cost you too many members.
Is a price rise worth the churn?Stop losing members by accident
Some members don't cancel: their card fails and nobody fixes it. Getting those payments back adds months to their stay.
What are failed payments costing you?Pay for results
An affiliate paid a share of each payment only costs you on members who pay. Set the rate from your budget and every referral is profitable.
Check your commission aboveWhat this calculator leaves out.
It's built to give you a budget you can act on. Here's where that costs accuracy.
Steady churn
Churn isn't always steady. If new members leave faster in their first months than members who've been around a year, their value comes earlier than the formula shows.
Money now, money later
A dollar in three years is worth less than one today. The formula doesn't discount, so at low churn lifetime value overstates: lean on the payback budget.
Every member alike
Members from a podcast, an ad and an affiliate can stay for very different lengths of time. If you can, work out churn for each channel.
Questions about lifetime value
How to work out what a member is worth, what to spend getting one, and what happens to the numbers you type in.
Divide what you keep from a member each month by your monthly churn. At $20 a month, keeping 90% after fees, with 5% of members cancelling each month, a member is worth $18 ÷ 0.05 = $360. The average member stays 1 ÷ churn months, 20 here, so it's the same as monthly margin times average stay. The calculator works it out for your own price, churn and costs.
Two rules of thumb set the limit, and the stricter one wins. The 3:1 rule says spend no more than a third of lifetime value. The payback rule says spend no more than a new member pays you in the months you're willing to wait, so the money comes back before you need it: David Skok's SaaS guideline is under 12 months. At $20 a month with 5% churn and 90% kept, a member is worth $360: 3:1 allows $120, and a 6-month payback allows about $95, so $95 is the budget.
The most-quoted guideline is David Skok's in SaaS Metrics 2.0: lifetime value should be more than 3 times what it costs to get a customer. Skok applies it to lifetime value before costs and assumes gross margins of 80% or more; the calculator applies it after fees and costs, which is stricter. It's a guide for software companies, not a law: a membership with little cash in the bank should care more about how fast the spend comes back.
CAC payback is the number of months it takes a new member's payments, after fees and costs, to cover what you spent getting them. Because some members cancel before then, it takes longer than spend ÷ monthly margin. At $18 a month kept and 7% churn, earning back $90 takes 6 months for the average member, not 5.
Work backwards from what you can afford to spend on a member. An affiliate commission is part of that budget, and its cost depends on the rate and how long you pay it: 30% for 12 months on a $20 membership with 7% churn costs about $50 per referred member, because the average member makes about 8.3 payments in their first year. Paying for as long as they stay costs rate × lifetime value instead, so the affordable rate is lower. The calculator shows the highest rate your budget covers for each.
Your own, from your billing data: members who cancelled last month divided by members you had at the start of it. If you don't have it yet, ChartMogul's SaaS Billing Report (2024 data) found a median customer retention of 41% on monthly plans for companies averaging under $25 a customer. Read as retention over a year, that's about 7% a month.
It assumes steady churn and one price. If your members churn faster in their first months and slower after, their value comes earlier than the formula shows. It doesn't discount future payments, so at very low churn lifetime value runs years into the future: lean on the payback figure there. And it treats every member as equally valuable, though members from different channels can stay for very different lengths of time.
No. Every calculation runs in your browser, and nothing you type is sent to Memberstack or anyone else. "Copy link" puts your numbers in the page's URL so you can share them if you choose to.
Built by the team at Memberstack, where over 10,000 businesses run their memberships.