Lifetime Value (LTV) Calculator
Calculate customer lifetime value from average revenue, retention, and lifetime length.
What is Lifetime Value (LTV) Calculator?
The lifetime value calculator estimates how much revenue (or gross profit) a customer generates over their entire lifecycle.
Formula
LTV = ARPU × gross margin × (1 / churn rate). LTV/CAC ratio > 3 is healthy.
Worked example
$50/mo ARPU, 70% margin, 5% monthly churn: lifetime 20 months. LTV = 50 × 0.7 × 20 = $700. With $500 CAC: ratio 1.4 (tight).
How to use this calculator
- Enter ARPU, churn, and gross margin.
- Optional CAC for the ratio.
Frequently asked questions
Healthy LTV/CAC ratio?
3:1 minimum. 5:1+ is excellent. Below 3:1 means acquisition is too expensive relative to value extracted.
Monthly vs annual churn?
5% monthly = ~46% annual (compounded). 1% monthly = 11% annual. Always note which timescale you're using.
How to lower churn?
Better onboarding, customer success, product improvements, retention pricing. 1% lower monthly churn = 20% LTV increase.
LTV in lump-sum purchases?
For one-time purchases (e-commerce), LTV is total purchases over the customer's lifetime, including repeat purchases. For SaaS/subscription, it's the recurring revenue model above.