Customer Lifetime Value (LTV) Calculator
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Estimate how much gross profit an average customer generates over their entire relationship with your business, using your ARPU, gross margin and monthly churn rate. Everything is computed in your browser.
What customer lifetime value actually measures
Customer lifetime value (LTV, sometimes CLV) is an estimate of the total gross profit you can expect from an average customer across the whole time they stay with you. It turns a recurring monthly relationship into a single forward-looking number, which is why subscription and SaaS businesses lean on it so heavily. Instead of asking "how much did this customer pay us this month?", LTV asks "how much profit will this customer be worth in total before they leave?"
The number is only useful when paired with what it costs to acquire that customer. On its own, a big LTV feels good; next to customer acquisition cost (CAC) it tells you whether your growth engine is actually profitable.
The formula, step by step
This calculator uses the standard churn-based model. First it derives the average customer lifetime in months as 1 divided by your monthly churn rate expressed as a decimal. A 4% monthly churn (0.04) implies an average lifetime of 1 / 0.04 = 25 months. Then LTV = ARPU × gross margin × average lifetime.
So a customer paying $50/month at 80% gross margin with 4% monthly churn is worth 50 × 0.80 × 25 = $1,000 in gross profit. We also show the "no margin" version (50 × 25 = $1,250) so you can see revenue and profit side by side.
- Average lifetime (months) = 1 ÷ (monthly churn % ÷ 100)
- Revenue LTV = ARPU × average lifetime
- Margin-adjusted LTV = ARPU × (gross margin % ÷ 100) × average lifetime
When to use it — and when to be careful
This simple model is ideal for early-stage planning, board decks, and quick unit-economics sanity checks. It assumes churn is roughly constant month to month, which is rarely perfectly true — real cohorts often churn fastest early and stabilise later, so the 1/churn shortcut can overstate lifetime for high-churn products. It also ignores expansion revenue (upsells and seat growth), which for many SaaS businesses is large enough that a more advanced model uses net revenue retention instead of a flat churn figure.
Always use gross margin, not revenue, when the LTV will be compared against CAC. And treat the output as a directional estimate for planning, not an accounting figure.
Frequently asked questions
Should I use monthly or annual churn?
Enter monthly churn to keep the lifetime figure in months. If you only have an annual churn number, convert it first — annual and monthly churn are not simply 12× apart because churn compounds.
What is a good LTV to CAC ratio?
A widely cited benchmark is an LTV:CAC ratio of 3:1 or higher, with a CAC payback period under 12 months. Below 1:1 you lose money on every customer; far above 3:1 may signal underinvestment in growth.
Does LTV include expansion revenue?
This simple churn model does not. If upsells and seat expansion are meaningful for you, a net-revenue-retention model will give a higher and more accurate LTV.
Why is my LTV so high with low churn?
Because 1/churn grows very fast as churn approaches zero. A 1% monthly churn implies a 100-month average lifetime, which can overstate reality for young companies with little cohort history.
Is my data uploaded anywhere?
No. All calculations happen locally in your browser; nothing you type is sent to a server.
Can I use this for non-subscription businesses?
The churn-based formula fits recurring-revenue models best. For transactional businesses, LTV is usually modeled from purchase frequency and average order value instead.
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