Lifetime Value (LTV) Calculator
Calculate customer lifetime value from average revenue, retention, and lifetime length.
What is a 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.