SaaS Pricing: How to Model MRR, LTV, and CAC

SaaS Pricing: How to Model MRR, LTV, and CAC Pricing is the fastest lever for SaaS growth. A 10% price increase drops straight to the bottom line if churn stays flat. But most founders guess. They look at competitors, pick something in the middle, and hope. There is a better way. Start With Unit Economics Before you set prices, model what happens after someone pays. Three numbers drive everything: MRR : Monthly Recurring Revenue per customer LTV : Lifetime Value (how much they pay before they leave) CAC : Customer Acquisition Cost (what you spent to get them) If LTV is less than 3x CAC, you have a problem. At 5x or higher, you have room to grow. Calculating MRR MRR is straightforward: average revenue per user times number of paying users. But average hides the truth. Break it down by plan. If you have a $29 basic tier and a $99 pro tier, your blended MRR depends on the mix. Track each tier separately. Know which customers drive your revenue. Annual plans complicate this. A $290 annual