Calculating the Customer Lifetime Value (LTV) of a SaaS business is crucial for understanding its long-term potential and making informed decisions about pricing, marketing, and resource allocation. The basic formula for estimating LTV involves multiplying the average monthly recurring revenue per user (ARPU) by the retention rate, which is the inverse of the churn rate. However, this formula assumes linear churn over time, which may not accurately reflect real-world scenarios where customers are more likely to leave in the early stages of their subscription. To estimate LTV, businesses can use SQL queries to extract ARPU and churn data from their transactional database, taking into account factors such as contract type and customer behavior. While this formula provides a basic estimate of LTV, it has limitations, including stability across cohorts and time, which may require revising the estimate downwards if assumptions are not met.