LTV Calculator
Calculate customer lifetime value and LTV:CAC ratio
Results are estimates and may not reflect your actual financial situation. This is not financial, tax, or legal advice. Consult a qualified professional.
How to use
Enter your Average Revenue Per User (ARPU) per month and monthly churn rate to calculate Customer Lifetime Value. Optionally switch to the gross margin mode to see margin-adjusted LTV. Add your Customer Acquisition Cost (CAC) to see the LTV:CAC ratio and payback period.
Formula
Examples
SaaS product
ARPU of $80/month with 4% monthly churn. Average customer lifespan is 25 months, giving an LTV of $2,000. With a CAC of $400, the LTV:CAC ratio is 5x (healthy) with a 5-month payback period.
Subscription box
ARPU of $35/month with 10% monthly churn. Average lifespan is 10 months, LTV of $350. With 60% gross margin, the margin-adjusted LTV is $210. At $50 CAC, the margin-adjusted LTV:CAC ratio is 4.2x.
Enterprise software
ARPU of $500/month with 2% monthly churn. Average lifespan is 50 months, LTV of $25,000. With $5,000 CAC, the ratio is 5x and payback is 10 months.
Frequently asked questions
What is Customer Lifetime Value?
Customer Lifetime Value (LTV or CLV) is the total revenue a business can expect from a single customer account over the entire relationship. It helps determine how much you can spend to acquire a customer while remaining profitable. A higher LTV means each customer is worth more over time.
Should I use revenue LTV or gross margin LTV?
Gross margin LTV is more accurate for business decisions because it accounts for the cost of delivering your product. Revenue LTV overstates customer value by ignoring COGS. Use gross margin LTV when comparing against CAC, and revenue LTV for top-line projections.
How do I calculate monthly churn rate?
Monthly churn rate is the percentage of customers who cancel in a given month. Divide the number of customers lost during the month by the number of customers at the start of the month, then multiply by 100. For example, 10 cancellations out of 200 customers is a 5% monthly churn rate.
What is a good LTV:CAC ratio?
A ratio of 3:1 or higher is considered healthy. This means you earn at least $3 for every $1 spent acquiring a customer. Below 1:1, you are losing money. Between 1:1 and 3:1, there is room for improvement. Above 5:1, you may be under-investing in growth.
How can I increase LTV?
Increase LTV by reducing churn (better onboarding, product improvements, customer success), increasing ARPU (upsells, cross-sells, price optimization), or improving gross margins (reducing delivery costs). Even small churn improvements have a large compounding effect on LTV.
About this tool
Calculate Customer Lifetime Value (LTV) from ARPU and churn rate. See LTV:CAC ratio, payback period, and gross margin-adjusted LTV.
All calculations are performed locally in your browser. Your data never leaves your device.